[ad_1]
Michael Barr spoke at the Council on Foreign Relations in New York about concerns regarding debanking and regulations on cryptocurrency as he steps down from his role as Vice Chair for Supervision at the Federal Reserve Bank.
When asked about pressures on banks during the discussion, Barr emphasized that the Fed strives to play “straight up the middle” on these issues while making sure that financial institutions comply with regulatory standards.
Barr urges banks to engage in crypto responsibly or stay out
Barr emphasized that the Federal Reserve does not discourage banks from engaging with crypto-related businesses, provided they comply with regulations concerning anti-money laundering (AML), consumer protection, and liquidity management. Barr stated.
You know, we try very much at the Fed to kind of play straight up the middle on these issues. So, we have institutions and banks of all sizes supervised by the Fed that are engaged in crypto-related activities, either themselves directly or supporting clients who do crypto work. Our expectation is they do that in a safe and sound way.
Michael Barr
The Vice-Chair also highlighted that the Federal Reserve has a supervision program for institutions dealing with digital assets. Some banks managed this sector well, while others encountered liquidity issues or compliance issues that caused their downfall.
According to Barr’s remarks on risk management in the banking sector, it is worth pursuing if you do it correctly and effectively; if you do not do it properly, then it’s best to avoid it.
Barr’s surprise exit clears path for Trump to reshape Fed leadership
Barr announced last month that he will step down on Feb. 28, in a surprise move that will avert a potentially messy legal fight with President-elect Donald Trump, who is now free to replace him with an official of his choosing.
Barr said he was stepping down as the central bank’s vice chair for supervision over a year before his term was set to expire in July 2026 but planned to keep his seat on the Fed’s Board of Governors. His term on the board is set to last until 2032.
Barr initially told Congress in November that he intended to serve out his term, but since then, he has concluded that doing so could risk a potentially harmful dispute with the Trump administration, which the Washington Post reported in October has considered demoting Barr from his regulatory post.
Barr’s exit adds uncertainty to the fate of US regulators’ proposal requiring major lenders to hold more capital to safeguard against losses and financial crises.
The KBW Bank Index climbed as much as 2.4% to the highest intraday since Dec. 16, after the Fed announced that Barr would step down from the position.
Barr has played a crucial role in negotiations for the proposal, which intends to prevent future bank failures and a financial crisis. The financial industry has lobbied aggressively against the new requirements, which as of now call for a 19% capital increase for the largest US banks, such as Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc.
In September, he previewed proposed changes that would lower that increase to 9%. Those revisions drew opposition from at least three out of five directors at the Federal Deposit Insurance Corp.,
Barr’s recent remarks reflect ongoing tensions between regulators and the banking industry over digital assets and financial inclusion.
[ad_2]
