by Jude Ayua

Michael S. Barr, Vice Chair for Supervision at the US Federal Reserve (Fed), will be resigning from the position, effective 28 February 2025, or earlier, if the new administration appoints a successor. The Federal Reserve Board announced Barr’s resignation on 6 January, but will continue to serve as Board Governor. The Fed’s announcement mentioned that Barr submitted his resignation letter to President Joseph R. Biden.

“It has been an honor and a privilege to serve as the Federal Reserve Board’s vice chair for supervision, and to work with colleagues to help maintain the stability and strength of the U.S. financial system so that it can meet the needs of American families and businesses,” Barr said in his letter. 

Barr stated further that the position of Vice Chair for Supervision was created after the Global Financial Crisis to strengthen responsibility, transparency, and accountability in the Federal Reserve’s supervision and regulation of the financial system. He emphasized that the risk of a dispute over the role could distract from the Fed’s core mission. Given the current circumstances, Barr expressed his belief that he could serve the American people more effectively in his role as Governor.

Read also: Gary Gensler:  The Imminent Resignation of the US SEC Chair and His Legacy.

Michael Barr’s term at the US Fed

Barr’s term as Vice Chair for Supervision began on 19 July 2022 and is expected to last until 2032. In this position, Barr oversaw the supervision and regulation of financial institutions under the Board’s jurisdiction and worked alongside other bank regulators to ensure the stability of the US banking system. Prior to his appointment to the Fed, Barr worked at the University of Michigan, serving in various capacities, including as Dean of the School of Public Policy and professor of law, specializing in financial regulation and international finance. He also worked in the US Department of the Treasury.

Read also: US Crypto Regulations: Trump Considering Quintenz for CFTC Chair.

Barr is renowned for his anti-crypto stance. He has actively influenced regulatory crackdowns on stablecoins and strongly opposed a US Central Bank Digital Currency (CBDC). The US crypto market predicts Barr’s departure would ease fears of restrictive regulatory measures during the final days of President Biden’s term, potentially reducing policy tensions around digital assets.

During his tenure, Barr closely aligned with Senator Elizabeth Warren’s skepticism of cryptocurrencies. He led efforts to limit stablecoin activity and keep digital assets away from the US banking sector. His opposition to a US CBDC contributed to delaying the concept, contributing to regulatory stagnation. Critics, including financial analyst Caitlin Long, argued that Barr’s policies excessively restricted and stifled innovation. Some labeled his approach as part of “Operation Choke Point 2.0.”

Read also: Blockchain advocacy groups sue the U.S IRS over new tax rules.

Prospects for the US crypto market

Barr’s resignation would be a remarkable shift in the US crypto regulatory landscape, especially with President-elect Trump already promising to adopt a more crypto-friendly approach. Fed Chair Jerome Powell’s recent comparison of Bitcoin to gold also suggests his possibly more neutral stance moving forward. Barr’s exit could give way for a more balanced regulatory framework in the Fed and potentially encourage greater institutional participation in the US digital asset sector. However, the long-term direction of crypto regulation in the country depends largely on the incoming administration’s policies and likely shifts in federal financial policy.

Read also: Ripple CLO Alderoty challenges the U.S SEC on digital assets regulations.

Image credit: Hiyun Jiang/New York Times

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Jude Ayua is a policy analyst at CAB. A lawyer, Jude is an associate at Infusion Lawyers where he is a member of the Blockchain & Virtual Assets Group. He is also a member of the Policy & Regulations Committee of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN). Jude reports and writes on crypto policy and regulations. jude@infusionlawyers.com

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