Crypto Doubter Michael Barr Confirmed as Vice Chairman for Supervision at US Federal Reserve

Michael Barr, a former Ripple adviser, is set to assume one of the most important U.S. regulatory roles after winning Senate confirmation to be vice chairman for supervision at the Federal Reserve.

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Barr, who was a key Treasury Department official during the administration of former President Barack Obama, will take over as the leading U.S. banking watchdog, where he'll have a say in how the traditional financial system interacts with cryptocurrencies – especially stablecoins, the lifeblood of crypto transactions.

Barr, who is currently the public policy school dean at the University of Michigan Law School, will also arrive at the Fed with a significant crypto background, having served on the advisory board at Ripple Labs. When he took that job in 2015 he said that he thought "innovation in payments can help make the financial system safer, reduce cost and improve access and efficiency for consumers and businesses alike."

However, the crypto industry may not be assured that an unabashed ally is taking the wheel. Barr is widely seen as a consumer advocate who supports aggressive regulation, favoring the interests of individuals over financial firms. And there's some record of his crypto doubts.

A 2020 paper he co-authored cited research that assets such as bitcoin (BTC) "not only generate huge mining costs, but are also inefficient in their long-run design."

During his tenure, the Fed is also expected to decide whether to issue a digital dollar – a move that could send shockwaves through the crypto industry. Barr's academic work has suggested a central bank digital currency (CBDC) could boost the government's financial inclusion aims. If such a CBDC is produced, its effect on private, dollar-based stablecoins could be profound.