Federal Reserve Governor Michael Barr on Thursday said that there is a need for more comprehensive regulation around stablecoins to address the“gaps” in regulation and ensure their stability.

While the GENIUS Act, passed earlier this year, establishes a baseline of permissible reserve assets and supervisory authority, Barr said significant gaps still remain.“Success will depend on how federal and state regulators implement these rules,” he said, speaking at the 2025 D.C Fintech Week. 

He stated that unregulated or lightly supervised stablecoins remain susceptible to runs, fraud, and operational failure because their reserve assets can vary widely in quality and liquidity. He noted that, unlike bank deposits, stablecoins are not backed by deposit insurance, and issuers lack access to central bank liquidity, raising the risk of rapid devaluation during market stress.

“Overall, these and other gaps may have implications for the safety and soundness of stablecoin issuers,” Barr said.“Tight control over reserve assets, coupled with supervision, capital and liquidity requirements, and other measures, could enhance the stability of stablecoins and make them a more viable payment instrument over the long term.”

Meanwhile, the cryptocurrency market edged 0.4% lower during morning trade on Thursday. Bitcoin's (BTC) price also dipped 0.4% in the last 24 hours, but retail sentiment on Stocktwits continued to trend in 'bullish' territory amid 'high' levels of chatter.

Get updates to this developing story<directly on Stocktwits.

Read also: Bitfarms Slides On $300 Million Offering After Rallying To Near 4-Year High, Retail Buzz Stays Elevated

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