Federal Reserve Governor Michael S. Barr used a keynote at DC Fintech Week to praise Congress for finally drawing lines around stablecoins—then immediately warned that the new law’s drafting could open channels for risk and regulatory arbitrage, including a pathway for Bitcoin-linked instruments to sit inside stablecoin reserves with only indirect Federal Reserve visibility.

Bitcoin May Exploit Loophole In GENIUS Act

Speaking in Washington on October 16, Barr said “payments innovation is accelerating,” and acknowledged that the newly enacted GENIUS Act “provides some clarity to issuers of stablecoins about how they can fit into the regulatory and supervisory framework,” potentially speeding development of new payment products. But he stressed that “success in accomplishing these goal

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