Michael Barr, vice chairman of supervision at the Federal Reserve, resigned on Monday, prompting a positive reaction from cryptocurrency advocates who see this as an opportunity for more cryptocurrency-friendly policies.
Barr announced that he will step down from his leadership role on February 28. He will, however, remain a member of the Federal Reserve Board of Governors.
Reports suggest that his departure came after serious discussions among President-elect Donald Trump’ s advisors about his potential demotion. The Washington Post reported Monday that Trump’s advisors were considering the unusual move of removing Barr from his position as vice chairman of banking supervision.
Such a move could trigger a legal battle, potentially threatening the Federal Reserve’s independence from the White House.
„The position of Vice Chairman for Supervision was created in the wake of the global financial crisis to enhance responsibility, transparency and accountability of the Federal Reserve’s oversight and regulation of the financial system,” Barr said in a statement.
„The risk of a dispute over a position can distract from our mission. In the current climate, I felt that I would be more effective in serving the American people from my role as governor.”
His resignation comes at a time when political influence over federal regulatory appointments in the US continues to grow. Meanwhile, Trump’ s inauguration is scheduled for the end of this month.
The vice chairman for supervision at the Fed heads banking regulation in the US and plays a key role in shaping financial policy. During his tenure, Barr has played an important role in shaping the interaction of traditional finance and cryptocurrencies.
There is no clear evidence that the Federal Reserve directly pressured banks to sever ties with digital currency companies. However, some in the cryptocurrency community blame Barr’s regulatory stance for banks distancing themselves from cryptocurrency customers, slowing the industry’s growth in the US. As a result, the cryptocurrency sector welcomes Barr’s resignation from his key role.
Republican Senator Cynthia Lummis, a prominent cryptocurrency advocate in Congress, said in a statement that Barr has „completely failed in his duties as vice president of oversight at every turn, enabling Chokepoint 2.0 and illegally increasing his power at the expense of Wyoming’s digital asset industry.”
Barr has pushed for stricter oversight of stablecoins, arguing that the Fed should regulate and enforce regulations on their issuers. This stance drew criticism from Republican lawmakers, who opposed his approach. Barr also established a dedicated team to oversee the cryptocurrency sector, with the goal of safely managing financial innovation.
In addition, he advised banks on engaging in cryptocurrencies, stressing caution due to the risks posed by these assets.
Barr’s regulatory approach focused on strong risk management for banks dealing with cryptocurrencies, which some industry insiders said discouraged banks from fully embracing digital assets.
