BlockBeats News, April 1st, Federal Reserve Governor Michael Barr stated that stablecoin development must be built upon strict regulation, warning that without effective constraints, it could repeat the ‘long history of issues with private currency.’ In his remarks, Barr pointed out that although the ‘GENIUS Stablecoin Act’ has provided an initial regulatory framework for the industry, the key lies in subsequent implementation, including continuous monitoring of reserve assets and mechanisms to prevent illegal use.
He emphasized that stablecoins can only truly be considered ‘stable’ if they maintain stable redemption at par value under various market conditions. In times of market stress or increased issuer risks, the liquidity and security of reserve assets are particularly crucial.
Furthermore, Barr noted that stablecoin issuers have incentives to generate profits by increasing yields, which may drive them to take higher risks in managing reserve assets, thereby posing potential threats to financial stability. (The Block)
