It is unlikely that cryptocurrencies will replace traditional currencies: Fed’s Barr
New York City: The chief regulator of banks in the United States has said that it is very improbable that cryptocurrency tokens would ever replace conventional currencies and that financial institutions should exercise extreme caution while experimenting with the asset class.
In prepared comments for a DC Fintech Week event on Wednesday, Federal Reserve Vice Chair for Supervision Michael Barr said that “since crypto assets have shown to be so volatile, it is doubtful that they will evolve into money replacements and become a viable method to pay for transactions.” “Banks that are interested in experimenting with these new technologies should do it in a restricted and limited way at the very least.”
The Bank of New York Mellon has announced the launch of a digital asset platform in the United States. Initially, the platform would be used by “chosen customers” to store and transfer cryptocurrencies such as Bitcoin and Ether. In his comments, he did not specify any particular initiatives that were currently underway.
Barr expressed his worry on the “new hazards” that are related with the engagement of banks in cryptocurrency. He also said that he thinks so-called cryptocurrency stablecoins might someday represent a danger to the stability of the financial system, and that authorities need to put in place guardrails prior to the widespread adoption of these types of cryptocurrencies.