Top Fed Official Sounds Alarm On Stablecoins: 'Could Pose A Risk To Financial Stability' - Bitcoin (BTC/

Stablecoins are usually described as the remedy to the volatility of cryptocurrencies. However,Michael S. Barr, vice chair for Supervision for the U.S.Federal Reserveis worried they could pose a risk to the financial stability of the country.

Barr said it is important to get the regulatory framework right. The President's Working Group report on stablecoins that came out about a year ago called upon Congress to take the necessary action to ensure that stablecoins, particularly those that serve as a means of payment, are subject to prudential regulation, Barr said in his speech at D.C. Fintech Week.

He noted that crypto assets have proved to be very volatile and are unlikely to become a viable means to pay for transactions, adding that stablecoins linked to the dollar are of particular interest to the Federal Reserve.

While stablecoins such asTetherUSDT/USD andUSD CoinUSDC/USD have recovered after getting de-pegged from the U.S. dollar, theTerraUST/USD crashcaused considerable apprehensionabout stablecoins. Major coins such as Bitcoin BTC/USD, Ethereum ETH/USD and Dogecoin DOGE/USD have been far more volatile, with a less than impressive performance so far this year.