The Federal Reserve does not discourage banks from serving the crypto industry, said Vice Chair for Supervision Michael Barr on Feb. 27 during a banking regulation conference in Washington, D.C.
Barr’s comments came one day before his resignation as vice chair for supervision, a role he had since July 2022. He plans to continue serving on the Federal Reserve Board of Governors. Federal Reserve Gov. Michelle Bowman is seen as a likely successor.
Barr’s comments came less than one month after Federal Reserve Chair Jerome Powell expressed confidence that banks can effectively serve crypto customers. Powell’s comments were considered his most positive toward the crypto sector since he became Fed chair in 2018.
“We think banks are perfectly able to serve crypto customers as long as they understand and can manage the risks and as long as it is safe and sound,” he said following the Federal Open Market Committee’s Jan. 28-29 meeting.
Barr discussed the Federal Reserve’s Novel Activities Supervision Program, which launched in the summer of 2023 and is intended to support innovation at supervised banks. The Federal Reserve initially identified two-dozen companies for supervision under the program. Barr said the program prioritizes clarity and collaboration.
“Engagement allows for banks and their supervisors to share perspectives on effective risk management practices and the application of new technologies,” Barr said. “Early and open dialogue creates opportunities for supervisors to provide feedback to banks on necessary risk management frameworks early on in their innovation process and to have an open dialogue that builds trust as products go to market.”