Fed's Barr expresses concerns about Bitcoin-backed stablecoins.

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[Federal Reserve Barr expresses concerns about stablecoins backed by Bitcoin] Federal Reserve Board of Governors Michael Barr expressed his concerns that under the newly passed GENIUS Act, stablecoins may use Bitcoin as a reserve asset, which could threaten the stability of these digital payment tools. Barr acknowledged the potential advantages of stablecoins in international remittances, cross-border trade, and corporate financial management, but emphasized the significant gaps in current regulation. Although the GENIUS Act does not directly support Bitcoin as a reserve, it allows for holding “any medium of exchange authorized or adopted by a foreign government” as a reserve asset. Barr pointed out that El Salvador had adopted Bitcoin as legal tender, and it still allows voluntary transactions, thus issuers may argue that Bitcoin buybacks could qualify as reserve assets for stablecoins.

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