Fed’s Barr Claims Crypto Unlikely To Replace Traditional Currency

• The Federal Reserve Vice Chair for Supervision claimed crypto tokens are unlikely to replace traditional currency. 
• Michael Barr further explained that banks should proceed cautiously.
• Barr explained that he was concerned about the “novel risks” in crypto.

During the DC Fintech Week event, The Federal Reserve Vice Chair for Supervision Michael Barr claimed that crypto tokens are unlikely to replace traditional currency. 

According to a report by Bloomberg, Barr further explained that banks should proceed cautiously when they experiment with the asset class.

On Wednesday, Michael Barr, based on his analysis, stated:

Because crypto assets have proved to be so volatile, they are unlikely to grow into money substitutes and become a viable means to pay for transactions. Banks looking to experiment with these new technologies should do so only in a controlled and limited manner.

Furthermore, Barr explained that he was concerned about the “novel risks” associated with banks’ involvement in crypto.

In addition, Barr said that he believes that the so-called crypto stablecoins could eventually pose a risk to financial stability and that regulators will need to put in guardrails before their adoption is more widespread.

On Tuesday, Bank of New York Mellon (BNY Mellon) announced that its Digital Asset Custody platform is live in the US. The Digital Asset Custody platform developed by BNY Mellon will allow selected clients to hold and transfer BTC and ETH. Although the community believes Barr’s remarks are based on BNY Mellons announcement, he did not mention any specific projects in his remarks.

Correspondingly, a study sponsored by BNY Mellon has shown that 41% of institutional investors hold cryptos, while 15% of investors plan to hold crypto in the future. The study has also shown that 91% of the institutional investors are interested in investing in tokenized assets.