Michael Barr, the U.S. Federal Reserve’s Vice Chair for Supervision, has announced his resignation, effective on February 28, 2025, or sooner if a successor is appointed. Barr’s departure follows growing criticism from the crypto community, particularly regarding his involvement in the alleged “Operation Chokepoint 2.0,” an initiative aimed at restricting crypto companies’ access to traditional banking services. Barr will remain a member of the Federal Reserve Board of Governors after his resignation from his vice-chair role.
Barr’s tenure, beginning in July 2022, was marked by significant scrutiny from the crypto industry. Many in the space pointed to his March 2023 speech, where he suggested it would be “unsafe and unsound” for banks to hold cryptocurrencies on their balance sheets. This statement, along with other regulatory actions, was seen by critics as part of a broader effort to limit the growth of the crypto industry.
Barr’s resignation has been welcomed by several members of the crypto community. Senator Cynthia Lummis and Custodia Bank CEO Caitlin Long both expressed approval, with Long labeling Barr the “FED’S DEBANKER-IN-CHIEF” and accusing him of undermining Wyoming’s digital asset industry. Blockchain-focused Castle Island Ventures partner Nic Carter also welcomed the change, noting that many anti-crypto officials, like Barr, have already resigned or stepped down.
Despite the criticism, Barr played a role in some positive crypto-related initiatives. He advocated for responsible stablecoin regulation, which is viewed as essential for fostering growth in the crypto space. He also supervised the Federal Reserve’s research into Central Bank Digital Currencies (CBDCs), a topic gaining global attention.
The crypto community remains concerned about the broader implications of Barr’s actions, particularly regarding Operation Chokepoint 2.0. While the U.S. government has not confirmed any coordinated effort to restrict crypto activity, court documents from the Coinbase exchange suggest that regulatory bodies attempted to curtail crypto activities. Coinbase’s chief legal officer, Paul Grewal, explained that these documents reveal efforts to limit a range of crypto activities, from basic Bitcoin transactions to more complex offerings.
John Deaton, a former U.S. prosecutor and crypto advocate, has proposed leading an investigation into Operation Chokepoint 2.0 under the incoming Trump administration. Deaton argues that regulatory bodies must not be allowed to suppress entire industries they disfavor, warning that such actions could stifle innovation and competition.
While Barr’s resignation is seen as a victory by some, it raises questions about the future of crypto regulation in the U.S. The Biden administration’s approach continues to evolve, with some policymakers advocating for greater oversight, while others push for more balanced approaches that foster innovation. The crypto community hopes Barr’s departure will lead to clearer policies that provide both consumer protection and space for innovation. With President-elect Donald Trump poised to take office soon, some believe his administration may usher in a more crypto-friendly environment.
Author’s Opinion
Barr’s resignation could signal a shift in the U.S. regulatory approach to crypto. However, it’s essential that future policies strike a balance between innovation and protection. Overregulation could stifle growth, while insufficient oversight could expose consumers to risks. What the industry needs is clear, fair regulation that promotes innovation while safeguarding users. The U.S. should aim to lead in the crypto space through thoughtful, transparent policies.
