Fed Vice-Chair Michael Barr Resigns Amid Accusations of Impacting Crypto Banking Services

U.S. Federal Reserve Vice-Chair for Supervision Michael Barr has announced his resignation from the position ahead of President-elect Donald Trump’s return to the White House.

His departure has sparked reactions from lawmakers and crypto industry leaders, who pointed out his controversial role in shaping U.S. banking policies concerning digital assets.

A Polarizing Figure in Banking and Crypto

In a January 6 release, the Fed stated that Barr would leave his post at the end of February or even earlier if the new president found a suitable successor. However, it noted that the legal scholar would remain on the seven-member Federal Reserve Board of Governors.

Barr has served as the Fed’s Vice Chair for Supervision since July 2022. The office was created in the aftermath of the 2008 Global Financial Crisis to offer more transparency and accountability for the U.S. central bank’s supervision and regulation of the country’s financial system.

In his time, the 58-year-old has been at loggerheads with the fledgling crypto industry, especially following his push to give the Federal Reserve the power to regulate and enforce laws against digital asset issuers in the United States.

Barr once stated that the monetary authority would likely deem it “unsafe and unsound” for banks to hold crypto-assets directly on their balance sheets. Many in the industry blame that perspective for limiting the ability of U.S. financial institutions to engage with the cryptocurrency sector.

Recent revelations about unredacted letters acquired from the Federal Deposit Insurance Corporation (FDIC) through legal efforts by Coinbase seem to bolster these claims. The documents allegedly show a coordinated effort to slow or halt banks’ crypto-related activities, including basic Bitcoin transactions, custody services, and crypto payments.

Allegations of Overreach

At a November 2024 grilling before the House Financial Services Committee, Barr and his fellow regulators were criticized by Iowa Congressman Zach Nunn, who accused them of stifling virtual currency innovations.

“You’ve all engaged in an anti-crypto crusade during your time here. You have helped make the United States a second-tier place for digital assets,” said Nunn.

Reacting to news of Barr’s impending exit, Wyoming Senator and crypto advocate Cynthia Lummis issued a statement alleging that the Fed governor had “illegally increased his power at the cost of Wyoming’s digital asset industry,” further accusing him of failing to uphold his responsibilities as the Vice Chair of Supervision.

The Yale alumnus is the latest anti-crypto official to resign from their position following Donald Trump’s crypto-fueled victory in last year’s U.S. presidential polls. Gary Gensler, head of the Securities and Exchange Commission (SEC), announced his departure on November 21, 2024, forestalling a promise by Trump to fire him on his first day in office.

Similarly, Barr has cited the “risk of a dispute over the position,” ostensibly with the incoming administration, as part of his reason for leaving.