Many crypto asset activities pose 'novel risks' to banks, says Fed vice chair for supervision

Michael Barr suggested financial institutions engage with U.S. regulators to ensure “safe, sound, and legally permissible” activities around use cases of innovative technologies.

Michael Barr, the vice chair for supervision for the United States Federal Reserve, warned banks of the potential risks of crypto-related activities, suggesting crypto service providers be subject to similar regulations as traditional financial institutions.

In written remarks prepared for an Oct. 12 speech at D.C. Fintech Week, Barr seemed to encourage banks to explore issuing tokens on distributed ledger networks, but “only in a controlled and limited manner.” The Fed vice chair for supervision suggested financial institutions engage with U.S. regulators to ensure “safe, sound, and legally permissible” activities around use cases of innovative technologies like crypto and stablecoins.

“The [Fed] is working with our colleagues at the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation to ensure that crypto-asse