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Crypto Reporter
Shalini Nagarajan
Crypto Reporter
Shalini Nagarajan
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Michael Barr, the Federal Reserve’s Vice Chair for Supervision, resigned on Monday, sparking a positive reaction from crypto advocates who see this as a chance for more crypto-friendly policies.
Barr announced he will step down from his leadership role on Feb. 28. He will remain a member of the Federal Reserve Board of Governors.
Reports suggest that his exit followed serious discussions among advisers to President-elect Donald Trump about his potential demotion. The Washington Post reported Monday that Trump’s advisers had considered the unusual move of removing Barr from his role as vice chair for banking supervision.
Such an action could have triggered a legal battle, potentially threatening the Fed’s independence from the White House.
Citing Political Climate, Michael Barr Resigns from Key Fed Role Ahead of Trump’s Inauguration
“The position of vice chair for supervision was created after the Global Financial Crisis to create greater responsibility, transparency, and accountability for the Federal Reserve’s supervision and regulation of the financial system,” Barr said in a statement.
“The risk of a dispute over the position could be a distraction from our mission. In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”
Crypto Industry Sees Opportunity for Change
His resignation comes as political influence over U.S. federal regulatory appointments continues to grow. Meanwhile, pro-crypto Trump’s inauguration is scheduled for later this month.
The Fed’s vice chair of supervision leads US banking regulation and holds a key role in shaping financial policy. During his term, Barr played a major role in shaping how traditional finance interacts with cryptocurrencies.
No clear evidence confirms that the Federal Reserve directly pressured banks to cut ties with digital currency firms. However, some in the crypto community blame Barr’s regulatory stance for banks distancing themselves from crypto clients, slowing the industry’s growth in the US. As a result, the crypto sector welcomes Barr’s resignation from his key role.
Sen. Lummis Slams Barr for ‘Chokepoint 2.0’ as Crypto Sector Criticizes Strict Oversight
Republican Senator Cynthia Lummis, a prominent crypto advocate in Congress, said in a statement that Barr “completely failed to fulfil his duties as Vice Chair for Supervision at every turn, enabling Chokepoint 2.0 and illegally increasing his power at the cost of Wyoming’s digital asset industry.”
Barr pushed for stricter oversight of stablecoins, arguing that the Fed should regulate and enforce rules on their issuers. This stance faced criticism from Republican lawmakers who opposed his approach. Barr also set up a dedicated team to oversee the crypto sector, aiming to manage financial innovations safely.
Additionally, he advised banks on engaging with cryptocurrencies, emphasizing caution due to the risks these assets pose.
Barr’s regulatory approach focused on strong risk management for banks dealing with crypto, which, according to some in the industry, discouraged banks from fully adopting digital assets.
