US Fed to create new crypto team amid concerns about unregulated stablecoins

The Fed’s Vice Chair for Supervision emphasized that they do not want to curb innovation, but ensure that regulations protect households and the financial system.

The United States Federal Reserve is set to create a “specialized team of experts” to keep up with developments in the cryptocurrency industry, according to a Fed official, amid concerns from the Fed of “unregulated” stablecoins.

Speaking at the Peterson Institute for International Economics in Washington on Mar. 9, Vice Chair for Supervision Michael Barr admitted that crypto could have a “transformative effect” on the financial system, but added that “the benefits of innovation can only be realized if appropriate guardrails are in place.”

According to Barr, the new crypto team will help the Federal Reserve “learn from new developments and make sure we’re up to date on innovation in this sector,” adding:

“Innovation always comes quickly, but it takes time for consumers to become aware that they could both gain and lose money on new financial products.”

Meanwhile, Barr noted that regulation needs to be a “deliberative process” to ensure a balance is reached between over-regulation which “will stifle innovation” and under-regulation which “will allow for substantial harm to households and the financial system”

One subsect of crypto that Barr highlighted as a point of concern was stablecoins.

He suggested that the assets backing many stablecoins in circulation are illiquid, meaning that it can be difficult to liquidate them for cash when needed, arguing:

“This mismatch in value and liquidity is the recipe for a classic bank run.”

He believes that unless regulated by the Fed, any widespread adoption of stablecoins could put households, businesses, and the broader economy at risk.

Caitlin Long, the CEO of Custodia Bank — which has consistently been rejected from joining the Federal Reserve System — pointed out the irony in the comments from Barr given her belief that Silvergate Bank collapsed due to liquidity issues arising from a bank run.

UM, WASN'T THE FED #Silvergate's REGULATOR?‍♀️
"The banks we regulate, in contrast, are well protected from bank runs thru a robust array of supervisory requirements."--Fed Vice Chair Supervision Michael Barr, speaking this morning(!)
h/t @ByKyleCampbell https://t.co/7UsHDKfiaC
— Caitlin Long ⚡️ (@CaitlinLong_) March 9, 2023

Long also pointed to the current issues facing Silicon Valley Bank, whose shares plummeted after a Mar. 8 financial update disclosed that it sold $21 billion worth of its holdings at a $1.8 billion loss, prompting fears that it was forced to sell to free up capital.

FRIENDLY REMINDER that, right as the panic was happening in Silicon Valley, the Fed’s Vice Chair for Supervision Barr said in a speech: "The banks we regulate, in contrast, are well protected from bank runs thru a robust array of supervisory requirements."https://t.co/FpPl2Qlk7x
— Caitlin Long ⚡️ (@CaitlinLong_) March 10, 2023

Stripe builds new crypto team for payments three years after dropping Bitcoin

Coin Telegraph

After pulling back from Bitcoin three years ago, Stripe is looking to re-enter the crypto sector.

U.S. fintech giant Stripe is hiring a new blockchain team to enable crypto payments for its users.

The $100 billion company is returning to the crypto sector three years after it pulled back from offering Bitcoin support due its slow transaction times and rising fees.

According to a job listing page on Stripe’s website, the firm is looking for four “Staff Engineers'' with experience in the crypto sector. Guillaume Poncin, the head of engineering stated on Twitter earlier today that he’s looking for engineers and designers to “build the future of Web3 payments.”

The listing outlines that the future engineers and designers will be tasked with working “across everything from web/mobile UIs to backend, payments and identity systems.”

“We hear a growing need from developers and users in that space for better building blocks to accept payments, move funds, exchange between fiat and crypto, etc. By focusing on these problems and needs, we aim to build faster, more trustworthy, and higher quality crypto-enabled experiences,” the listing reads.

Stripe announced a new Web3 payments team and Coinbase announced an NFT product this morning.

Probably nothing.
— Chris Neumann (@ckneumann) October 12, 2021

Stripe Co-founder John Collison chimed in on Poncin’s post by stating that “Stripe and crypto have grown up at the same time,” and said that the firm decided to take the plunge into crypto after observing “exciting” developments in the space:

“We started writing code the year after the Bitcoin paper dropped. We’ve always kept an eye on things (e.g. Bitcoin support 2013-2015) but last few years’ developments (L2s, new chains, stablecoins, DeFi) are particularly exciting.”

The move to accept crypto payments comes after major competitors includ Square, Paypal, Mastercard, and Square have all entered the crypto sector. Square launched BTC trading via its Cash App in 2018, Paypal launched crypto support for U.S. customers in October 2020, while Mastercard announced in February this year that it would support multiple crypto assets on its network.

Stripe initially started accepting Bitcoin (BTC) back in 2014, but withdrew support four years later due to its slow transaction times and rising fees. In a blog post from Jan. 23 2018, Stripe stated that it may return to the sector once crypto payments are “viable,” pointing to the development of the Lightning Network and “high-potential” projects emerging on the Ethereum blockchain.

Earlier this year in June, Collison hinted that the firm was looking at crypto again as he told Bloomberg TV that:

"If you think of the kind of world that crypto people and we are trying to bring about, I think it's a very related set of goals."

"We are stuck down at this level where only a fifth of interactions are cross border, crypto is one very exciting direction for trying to solve that," he added.

The digital payments company was founded in 2011 and has a current valuation at around $100 billion. In March 2021, Stripe raised $600 million in a funding round at a valuation of $95 billion, more than doubling its previous valuation of $35 billion from 2019. According to data from Built With, there are currently 784,256 active websites using Stripe’s payments platform.

Crypto team