01.04.202613:41 Forex Analysis & Reviews: Fed's Michael Barr warns about stablecoins

Meanwhile, as Bitcoin and Ether have paused after yesterday's bullish session, Federal Reserve Governor Michael Barr said that stablecoins raise a number of concerns related to potential money money-laundering risks and threats to financial stability, and he warned banking regulators as they prepare to draft rules.

Barr said in prepared remarks that the quality and liquidity of stablecoin reserve assets were critical to their long-term viability and that stablecoin issuers had an incentive to maximize yield on those reserves by stretching their risk profile as far as possible.

These two conflicting incentives — the need for safe, liquid reserves to protect investors and the issuers' desire for high returns — create fertile ground for potential problems. Barr also expressed concern about how stablecoins might be used to circumvent existing rules, which would undermine anti-money-laundering and counter-terrorist financing efforts.

Many experts have repeatedly noted that, while stablecoins can offer advantages such as improved payment efficiency, their integration into the traditional financial system requires careful consideration and strict regulation. Barr's remarks indicate that regulators are ready to act to minimize the risks associated with this new asset class.

Barr also pointed to potential benefits of digital assets, such as helping firms perform treasury functions or execute remittances.

As a reminder, the main piece of US legislation governing stablecoin issuance is the Genius Act, which requires stablecoin issuers to register formally and to hold reserves on a one-to-one basis.

Barr said that strict control over reserve assets, together with supervision, capital and liquidity requirements, and other measures, could enhance stablecoins' stability and make them more viable as payment instruments, but that success in achieving those aims would depend on the details of regulatory implementation.

Trading recommendations:

Regarding Bitcoin's technical picture, buyers are currently targeting a return to $69,700, which opens a direct route to $71,400, and from there to $72,500. The most distant target is the high around $74,600, the breach of which would signal attempts to return to a bull market. In case of a decline, I expect buyers at $68,100. A drop below that area could quickly push BTC toward $66,500. The furthest target would be around $64,900.

Regarding Ethereum's technical picture, a clear hold above $2,175 opens a direct route to $2,238. The most distant target is the high near $2,296, the breach of which would indicate strengthening bullish sentiment and a return of buyers' interest. In case of a decline, I expect buyers at $2,121.00. A return of the instrument below that area could quickly send ETH toward $2,058. The furthest target would be around $1,978.

What we see on the chart:

- Red lines indicate support and resistance levels where either a price slowdown or active growth is expected;

- Green lines indicate the 50-day moving average;

- Blue lines indicate the 100-day moving average;

- Light green lines indicate the 200-day moving average.

A crossover, or a price test of moving averages, typically either halts the move or sparks fresh market momentum.