Overview
- Barr said the law’s reserve menu could undermine one-to-one backing, citing uninsured deposits, overnight repo, and potential bitcoin-repo claims tied to El Salvador’s legal-tender status.
- He warned that bank-linked issuers may face no standard capital requirements despite broad activities, posing risks to parent banks and the wider system.
- Pointing to past runs, he referenced the 2008 money-market fund break and the March 2023 banking stress, when some stablecoins briefly lost their pegs during redemptions.
- With rulemaking now underway, he urged federal and state agencies to coordinate to prevent supervisory arbitrage and to clarify consumer protections and the very definition of a stablecoin.
- He noted stablecoins’ payments potential contingent on credible oversight, while industry players continue building infrastructure before final standards, with Circle voicing support for strong guardrails.