The Federal Reserve's top regulator said the central bank has not sought to drive a wedge between the crypto sector and the traditional banking system.
In a Thursday morning speech, Vice Chair for Supervision Michael Barr said the Fed "neither prohibits nor discourages" bank
"In fact, banks supervised by the Federal Reserve provide material and important services to the crypto industry," Barr said. "For example, banks supervised by the Fed operate real-time, 24/7 payment platforms that serve as a primary mechanism for companies to exchange dollars to settle crypto assisted transactions."
Barr did not specify the companies to which he was referring, but noted that the Fed monitors those activities closely for safety and soundness considerations and with an eye toward protecting financial stability. But, he insisted, this does not mean supervisors pressure banks into moving away from complicated partnerships.
"We do not tell banks to serve or not to serve these customers," he said.
Barr delivered his speech at an event hosted by the Alliance for Innovative Regulation, or AIR, in Washington, D.C.
During his prepared remarks and in an onstage question and answer session with AIR CEO Jo Ann Barefoot, Barr pushed back against the idea that banking agencies have sought to stifle the digital assets sector by encouraging banks to close the accounts of individuals and companies active in the cryptocurrency space.
Crypto executives, politicians and even the large bank advocacy group the
Concerns about regulatory discrimination have been given credence this month thanks to a
But Barr said in no uncertain terms that Fed supervisors are not seeking to debank crypto.
"The Federal Reserve neither prohibits nor discourages organizations from providing banking services to customers of any specific type or class as permitted by law or regulation, it is up to banks to choose their own customers and not supervisors," he said. "That has been and will continue to be our practice."
Instead, Barr argued that the Fed has sought to better understand emerging technologies, both by exploring them internally and discussing them with the institutions it supervises. He noted that the Fed launched a Novel Activities Supervision Program in 2023 to oversee both efforts.
In his remarks, Barr said the program oversaw two dozen firms of various sizes when it launched, and with banks being added and dropped from the program based on their engagement in innovative activities. He said the group, which works alongside the Fed's usual supervisory teams, employs a "risk-based" approach, applying greater scrutiny to larger institutions and riskier activities.
"There is no one-size-fits-all model," he said.
Barr said the programs have prioritized clarity and collaboration, seeking to deal transparently with supervised entities while also inviting input from a wide variety of stakeholders — including financial technology companies seeking to partner with banks — to improve oversight standards and practices.
Highlighted by a request for information on bank-fintech partnerships last year, Barr said these efforts have also included direct conversations between market participants. He noted that the central bank intends on holding a fintech conference in San Francisco later this year to broaden these efforts.
Barr described these various pursuits as part of a "culture of curiosity" at the Fed.
"The career staff that I've worked with in the last two and a half years, and in the last 25 years before that, are incredibly creative, curious people," he said. "Having that culture of curiosity, I think, is one [way to keep up with the speed of innovation]."
Friday is Barr's last day as vice chair for supervision. He announced his
