Gate News update: On March 31, Federal Reserve Governor Michael Barr spoke about stablecoin regulation, stressing that stablecoin development must be built on strict oversight, and warning that without effective constraints, history could repeat the “long-term history of problems caused by private money.”
Barr said that although the “GENIUS Stablecoin Act” has provided the industry with an initial regulatory framework, the key is follow-through and implementation— including ongoing monitoring of reserve assets and building mechanisms to prevent illegal use.
He emphasized that stablecoins can truly be considered “stable” only if they can redeem at face value across various market conditions. When market pressure increases or the issuer’s own risks escalate, the liquidity and safety of reserve assets are especially critical.
Barr also noted that stablecoin issuers have incentives to profit by boosting yields, which could lead them to take on greater risk in managing reserve assets, posing potential threats to financial stability. At present, stablecoin regulatory issues remain one of the major points of contention in U.S. crypto legislation and, to a certain extent, affect the progress of related bills.
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