Federal Reserve's Barr expresses concerns over Bitcoin-backed stablecoins

Jinse Finance reported that Federal Reserve Governor Michael Barr expressed concerns that under the newly passed GENIUS Act, stablecoins might use bitcoin as a reserve asset, which could threaten the stability of these digital payment tools. Barr acknowledged the potential advantages of stablecoins in international remittances, cross-border trade, and corporate financial management, but emphasized that there are significant regulatory loopholes under current frameworks. Although the GENIUS Act does not directly support bitcoin as a reserve, it allows holding "any medium of exchange authorized or adopted by a foreign government" as a reserve asset. Barr pointed out that El Salvador once adopted bitcoin as legal tender and still allows voluntary transactions, so issuers might argue that bitcoin buybacks could qualify as eligible reserve assets for stablecoins.