Fed’s Barr Warns Stablecoins Could Trigger Chaos Despite New Law
Federal Reserve Governor Michael S. Barr issued a cautious note on the stability of dollar-linked stablecoins, even as the GENIUS Act establishes a groundbreaking regulatory framework for the sector. The law aims to bring order to the rapidly growing stablecoin industry by setting issuance and backing parameters, but Barr emphasized that systemic risks remain unaddressed.
"Stablecoins will be stable only if they can be reliably and promptly redeemed at par in a wide range of conditions," Barr said, highlighting vulnerabilities during market stress or issuer strain. The Fed governor acknowledged the law’s potential to foster innovation but drew parallels to historical failures of private money without adequate safeguards.
The warning underscores the delicate balance between regulatory oversight and technological progress in the crypto ecosystem. While the GENIUS Act provides foundational rules, Barr’s remarks suggest that true stability hinges on rigorous enforcement and market resilience.
