US Federal Reserve sets up new specialist team to supervise crypto sector
The US Federal Reserve is putting together a “specialised team of experts” to monitor the cryptosphere as it looks to manage risk and promote innovation.
US Federal Reserve to create specialist crypto team
In a speech at the Peterson Institute for International Economics in Washington DC, the US central bank’s vice chair for supervision, Michael Barr, says the team will help the Fed “learn from new developments and make sure we’re up to date on innovation in this sector”.
The Fed, Barr says, is keen to emphasise “the need to balance innovation with safeguards”.
“Our goal is to create guardrails, while making room for innovation that can benefit consumers and the financial system more broadly,” Barr says.
The Fed is working with other bank regulatory agencies to determine “whether and how” crypto activities can be conducted “in a manner that is consistent with safe and sound banking”.
Because some banks are exposed to cryptoassets, Barr says volatility in the cryptosphere can lead to “unpredictable, rapid, and correlated deposit inflows and withdrawals”, and therefore the liquidity risks of bank deposits “require some additional attention”.
“These liquidity concerns are particularly acute for banks that have a meaningful portion of their balance sheets funded with such deposits,” Barr adds.
Barr says the Fed will also provide additional clarity around the central bank’s views on risk management for cryptoassets and will be transparent with both the banking sector and the public about its expectations.
