Michael Barr US Fed vice chair advocates a harsh position on crypto; OCC acting chief is no kinder

Michael Barr
Michael Barr US Fed vice chair advocates a harsh position on crypto; OCC acting chief is no kinder

Michael Barr, a former Ripple Labs consultant, in his first address as a Fed official, seems to have a somewhat less positive view of cryptocurrencies than he had in the private sector

On September 7, two financial representatives of the US government gave speeches outlining their views on cryptocurrency legislation. They both have misgivings about bitcoin.

Michael Barr gave his first address in his new role as vice chair for supervision of the US Federal Reserve Board at the Brookings Institute.

At the annual conference of The Clearing House and Bank Policy Institute, Acting Comptroller of the Currency Michael Hsu restated his opinions on cryptocurrencies.

In his speech, Barr discussed “some of my short-term goals and the strategy I’ll use to achieve them.” He made two references to crypto.

First, he asked for measures to regulate stablecoin and provided historical examples of private money disrupting the economy. Barr states;

“I believe Congress should work expeditiously to pass much-needed legislation to bring stablecoins, particularly those designed to serve as a means of payment, inside the prudential regulatory perimeter.” 

“As we have seen with the growth of crypto assets, in a rapidly rising and volatile market, participants may come to believe that they understand new products only to learn that they don’t,” Barr continued as he addressed crypto assets generally.

He stated that his intention was to protect both the banking system and bank customers. He went on:

“We plan to work with other bank regulatory agencies to ensure that crypto activity inside banks is well regulated, based on the principle of same risk, same activity, same regulation, regardless of the technology used for the activity.”

Hsu appeared at the same conference the year before and brought up his old topic, “Safeguarding Trust in Banking.”

When he was appointed to his position, he made such a statement;

“I had a different perspective and saw red flags in crypto’s rapid growth. Under my direction, the OCC [Office of the Comptroller of the Currency] has adopted a ‘careful and cautious’ approach.”

The OCC’s Interpretive Letter 1179, which was published in November of last year, reflected that strategy.

According to the letter, banks are allowed to engage in cryptocurrency-related activities “so long as the bank can satisfy its supervisory office that it has controls in place to conduct the activity in a safe and sound way.”

Stablecoins and the demise of Terra were two examples of cryptocurrency’s disruptive potential that Hsu cited.

He pointed out that the industry is experiencing “de-integration” as a result of the fast-changing relationship between banks and fintech firms.

On July 13, Barr, a previous representative on the Ripple Labs advisory board, was named to the Fed.

He was formerly anticipated to accept the position of currency comptroller.

The comptroller in interim status since May 2021 is Hsu.