Fed official: Stablecoins pose a threat, but could present innovative opportunities

US economic leaders gathered in DC Tuesday to discuss the future of crypto policy and innovation in America

article-image

Andy.LIU/Shutterstock modified by Blockworks

share

US financial leaders are taking a hard look at crypto, from both a regulatory and innovative perspective. 

Among the arguments being made today: The Federal Reserve needs to step up its oversight of the stablecoin ecosystem, and the Office of the Comptroller of the Currency — which oversees the American banking system — could benefit from increased tokenization, officials said Tuesday at the DC Fintech Week event in Washington. 

“It’s really important for us to learn about new technology all the time,” said Michael Barr, the Fed’s Vice Chair for supervision. “There’s obviously a lot of innovation happening in the private sector around stablecoins and we want to make sure we can harness that innovation to improve efficiencies if we can in the payment system.” 

Read more: Stablecoins set to succeed where BTC, ETH failed: Pantera

Michael Hsu, acting US Comptroller of the Currency, agreed and argued during a separate panel that blockchain tech could be a game changer in the settlement space. 

Tokenization is focused on solving an actual problem, and that problem is settlement,” Hsu said. 

The crypto industry as a whole, however, remains less promising to Hsu, who said the space is still “replete with frauds, scams and hacks.” 

Barr added that significant oversight from the central bank is essential, particularly in the stablecoin space, to protect the financial system. 

“If a private sector entity is creating a stablecoin that is connected to a fiat currency, in the case that we care about [it would be] the United States Dollar, they’re creating a form of private money, and private money needs to be well regulated,” Barr said. 

Tuesday’s remarks were not Barr’s first time speaking about stablecoins and central bank digital currencies. 

“When that asset is also used as a means of payment and a store of value, it borrows the trust of the central bank,” Barr said in a speech last month. “The Federal Reserve has a strong interest in ensuring that any stablecoin offerings operate within an appropriate federal prudential oversight framework, so they do not threaten financial stability or payments system integrity.” 

In terms of federal policy, lawmakers on both sides have appeared interested in getting stablecoin legislation to President Joe Biden’s desk. 

Earlier this year, the House Financial Services Committee advanced the Clarity for Payment Stablecoins Act, a bill that gives more power to state regulators in licensing issuers. 

CBDCs, on the other hand, have emerged as a more partisan issue

Rep. Tom Emmer, R-Minn., introduced the Central Bank Digital Currency Anti-Surveillance State Act in September, a bill that would bar the Fed from issuing a retail CBDC. Rep. Maxine Waters, D-CA., was quick to criticize the text, arguing that Emmer and other Republicans are preventing the US dollar from maintaining its global reserve currency status and hindering innovation. 

A renewed race to avoid a government shutdown this month, however, means odds of any movement on crypto-related policy are slim.

Barr added Tuesday that the Fed is currently in a strictly research-only phase of their investigations into a CBDC.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (5).png

Research

Outside of stablecoins, the value of tokenized assets sits below $20B, dominated by the following asset classes: private credit, US Treasuries, commodities, institutional alternative funds, stocks, non-US government debt, and corporate bonds. In the coming months, we see the greatest opportunities in the tokenization of illiquid markets, particularly private equity. However, the successful integration of offchain assets into blockchain ecosystems relies heavily on clear and consistent regulatory frameworks, with purpose-built infrastructure to support it.

article-image

Luke Barwikowski took to Twitter to raise awareness about the threats against him and his family

article-image

David Chaum’s ecash in the 90s offers insights into balancing priorities in DeFi today

article-image

The forthcoming stablecoin was praised by BitGo’s Mike Bleshe as an advancement in “institutional-ready digital assets”

article-image

Chronicle’s Niklas Kunkel talked to Blockworks about the raise and why he’s prioritizing research

article-image

Sponsored

DESK isn’t just another trading platform — it’s redefining what’s possible in on-chain trading

article-image

The real strength of tailored AMMs might lie in their capacity to cultivate deeper loyalty and engagement within niche communities