Federal Reserve Governor Michael Barr has called for stricter anti-money-laundering controls on stablecoins, warning that their accessibility creates risks for illicit finance.
Barr said regulators must strengthen oversight under the GENIUS Act, particularly around secondary markets where users can access stablecoins without identity verification.
“A key area of concern is the potential for stablecoin use in money laundering or terrorist financing,”
Barr said.
He highlighted that both regulatory frameworks and technological tools, such as monitoring systems or automated controls, may be needed to mitigate these risks.
The comments follow a US Treasury report urging Congress to consider laws allowing institutions to freeze suspicious digital assets during investigations.
Global regulators, including the Financial Action Task Force, have also flagged peer-to-peer stablecoin transfers as a key vulnerability for sanctions evasion and illicit activity.
Barr’s stance reflects broader concerns that, without stronger oversight, stablecoins could undermine financial stability and the credibility of the US monetary system.