US Fed Vice Chairman Michael Barr Supports Hard Line on Crypto, OCC Chief Has No Friendly

On September 7, two US government finance officials announced their position on crypto regulation. Both had reservations about crypto.

Michael Barr, who was recently appointed as the Vice Chairman of the Federal Reserve Board of the United States, gave his first speech in his new tenure at the Brookings Institution. Michael Hsu, the chairman of the currency, reiterated his sentiments about crypto at the annual conference of the Clearing House and Banking Policy Institute.

Barr talks about “some of my recent goals and how I’m approaching them.” He mentioned Kryptor in two contexts. First, he called for action to regulate the stablecoin, citing historical examples of private funds destabilizing the economy. Barr said:

“I believe that Congress must act quickly to pass the necessary legislation, especially those designed to serve as a means of payment, within the perimeter of the extraordinary control.”

Referring to crypto assets in general, Barr said that he intends to protect the banking system and bank customers, “As we have seen with the growth of crypto assets, participants can come in a rapidly growing and dynamic market.” They believe that they understand new products only to learn that they don’t have them. He continued:

“We plan to work with other banking regulatory agencies based on the same risk, same activity, same regulation, regardless of the technology used for the activity.”

Hsu spoke at the same conference last year, and he revised the topic “Maintaining Confidence in Banking” from last year. When he was appointed, he said:

“I had a different perspective and saw red flags in the rapid growth of crypto. According to my instructions O.C.C [Office of the Comptroller of the Currency] It has adopted a ‘careful and cautious’ approach.

That approach was reflected in OCC Interpretive Letter 1179 issued last November. The letter states that transactions with crypto will be permitted for banks “if the bank can demonstrate to the satisfaction of the regulator that it has controls in place to conduct the transaction in a safe and sound manner.”

Related: OCC regulator seeks standards on stablecoins

Hsu cited Stablecoin and the collapse of Terra as examples of crypto’s disruptive potential. He pointed out that the relationship between banks and fintech companies is growing rapidly, leading to “consolidation” in the sector.

Barr, a former Ripple Labs advisory board member, was appointed to the federation on July 13. Hsu has been working as a supervisor since May 2021.