Fed’s top financial regulator urges ‘guardrails’ for crypto

Nov 14, 2022, 1:33 AM | Updated: 4:26 pm
FILE - Federal Reserve Board Vice Chair for Supervision Michael Barr listens to participants in a c...

FILE - Federal Reserve Board Vice Chair for Supervision Michael Barr listens to participants in a conversation with leaders from organizations that include nonprofits, small businesses, manufacturing, supply chain management, the hospitality industry, and the housing and education sectors at the Federal Reserve building, Friday, Sept. 23, 2022, in Washington. In prepared testimony released Monday, Nov. 14, 2022, Barr is urging Congress to pass legislation that would impose regulation on crypto currencies in the wake of the swift collapse a week earlier of FTX, a leading crypto exchange. (AP Photo/Manuel Balce Ceneta, File)

(AP Photo/Manuel Balce Ceneta, File)

WASHINGTON (AP) — The top U.S. banking regulator at the Federal Reserve is urging Congress to pass legislation that would impose regulation on crypto currencies in the wake of the swift collapse last week of FTX, a leading crypto exchange.

Michael Barr, the Fed’s vice chair for supervision, said in prepared testimony released Monday that “recent events in crypto … have highlighted the risks to investors and consumers associated with new and novel asset classes and activities when not accompanied by strong guardrails.”

Barr, who took office in July, is scheduled to testify before Congress Tuesday for the first time as vice chair. He did not refer specifically to FTX in his written remarks.

Yet his appearance comes after FTX, the third-largest crypto currency exchange, formerly led by Sam Bankman-Fried, filed for bankruptcy Friday. The fall of FTX has rippled throughout the crypto world, with lender BlockFi pausing customer withdrawals.

Barr said “some financial innovations offer opportunities, but as we have recently seen, many innovations also carry risks.” Those include runs on deposits, collapsing asset values, misuse of customer funds, fraud, theft, manipulation, and money laundering, he said.

“These risks, if not well controlled, can harm retail investors and cut against the goals of a safe and fair financial system,” Barr said.

The collapse of FTX occurred outside the banking system, Barr noted, a focus of his oversight.

“But recent events remind us of the potential for systemic risk if interlinkages develop between the crypto system that exists today and the traditional financial system,” he said.

Regarding the banking system overall, most large banks have healthy levels of cash reserves, Barr said, beyond even what is required by regulation.

But with the economy slowing as the Fed rapidly lifts interest rates, banks may come under more stress, he said.

The “economic outlook has weakened,” increasing uncertainty, Barr said. “A weaker economy could put stress on households and businesses and, thus, on the banking system as a whole.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - A Boeing 747-8, Boeing's new passenger plane, takes its first flight, Sunday, March 20, 2011...
Associated Press

Boeing’s last 747 to roll out of Washington state factory

After more than half a century, Boeing is set to roll its last 747 out of a Washington state factory on Tuesday.
23 hours ago
FILE - Three girls embrace before they are removed from the home of Samuel Bateman, following his a...
Associated Press

FBI: Polygamous leader had 20 wives, many of them minors

FLAGSTAFF, Ariz. (AP) — The leader of small polygamous group near the Arizona-Utah border had taken at least 20 wives, most of them minors, and punished followers who did not treat him as a prophet, newly filed federal court documents show. Samuel Bateman was a former member of the Fundamentalist Church of Jesus Christ of […]
23 hours ago
Associated Press

Report: 25 people detained in far-right raids across Germany

BERLIN (AP) — German news agency dpa reports that 25 people have been detained as part of a series of raids against suspected far-right extremists across the country early Wednesday. Dpa cited federal prosecutors as saying officers conducted searches in 11 of Germany’s 16 states against members of the so-called Reich Citizens movement. Some members […]
23 hours ago
FILE - Israeli lawmaker Itamar Ben-Gvir, center, surrounded by right wing activists with Israeli fl...
Associated Press

US Jews fear collision with expected Israeli government

JERUSALEM (AP) — Israel’s ties to the Jewish American community, one of its closest and most important allies, are about to be put to the test, with Israel’s emerging far-right government on a collision course with Jews in the United States. Major Jewish American organizations, traditionally a bedrock of support for Israel, have expressed alarm […]
23 hours ago
Yale University doctoral students Siria Gamez, and Aishwarya Bhandari, rear, work on a wildlife cam...
Associated Press

Extinctions, shrinking habitat spur ‘rewilding’ in cities

DETROIT (AP) — In a bustling metro area of 4.3 million people, Yale University wildlife biologist Nyeema Harris ventures into isolated thickets to study Detroit’s most elusive residents — coyotes, foxes, raccoons and skunks among them. Harris and colleagues have placed trail cameras in woodsy sections of 25 city parks for the past five years. […]
23 hours ago
A cyclist passes by household waste inside yellow trash bags marked as medical waste in Beijing, We...
Associated Press

China announces rollback of strict anti-COVID-19 measures

BEIJING (AP) — In a sharp reversal, China has announced a series of measures rolling back some of its most draconian anti-COVID-19 restrictions, including limiting harsh lockdowns and ordering schools without known infections to resume regular classes. The National Health Commission in a 10-point announcement on Wednesday stipulated that COVID-19 tests and a clean bill […]
23 hours ago

Sponsored Articles

Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Fed’s top financial regulator urges ‘guardrails’ for crypto