Michael Barr, the Federal Reserve's Vice Chair for Supervision, stepped down on Monday, a move welcomed by crypto industry advocates as a potential shift toward more pro-digital asset policies.
Barr said he would step down on February 28, though he will continue to serve as a Federal Reserve Board of Governors member.
He attributed his departure to “dispute[s] over the position,” according to a statement.
It comes as appointments at U.S. federal regulatory agencies become highly politicized in the lead-up to pro-crypto President-elect Trump's inauguration later this month.
The departure of one of the U.S. banking sector's top cops, who long called for the implementation of “appropriate guardrails” for the digital assets industry, elicited cheers from some corners of the crypto community.
“Barr stepping down is a huge win,” Samuel Armes, founder of the Florida Blockchain Business Association, told Decrypt. “We need to clean out any Elizabeth Warren and Biden-associated appointees…to ensure the [federal government] goes back to being unbiased toward our industry.”
As the second-highest ranking official at the Federal Reserve, Barr wielded substantial power over the U.S. banking system—a lifeline for some crypto businesses in the U.S.
Major crypto exchanges rely on banks to facilitate money transfers that enable customers to buy and sell digital assets on their platforms.
But some of those companies have been shut out from financial institutions in recent years after federal regulators allegedly pressured banks to limit their interactions with crypto firms.
While it's unclear if the Federal Reserve directly pressured banks to cut ties with digital asset firms, some crypto insiders, including Patrick Liou of Gemini, blame Barr for debankings that have hindered the U.S. crypto industry in recent years.
“The environment for the crypto industry the last four years in the US has been untenable,” Liou told Decrypt.
“Many [people in the industry] believe that government organizations negatively influenced the ”de-banking“ of crypto businesses…guiding US businesses away from working with crypto clients and partners,” he added.
Barr's departure comes a few weeks after so-called anti-crypto SEC Chairman Gary Gensler and Commissioner Jaime Lizárraga signaled last November they would resign from their posts when pro-crypto President-elect Donald Trump takes office later this month.
It also comes shortly after Senate Banking Committee members canceled last month a meeting to reappoint Biden-nominated SEC Commissioner Caroline Crenshaw to her post at the agency largely responsible for regulating the U.S. crypto industry.
However, a change of guard at the Federal Reserve and the SEC is just one “part of a puzzle” that must be solved to ensure the crypto industry's brighter future in the U.S., NYU Stern Adjunct Professor Austin Campbell told Decrypt.
Federal agencies such as the Department of Treasury, the IRS, and FinCEN also exercise enormous power to issue directives that affect digital asset companies and holders in the U.S.
“Getting U.S. banking regulators to embrace technological transformation so our banking system can join the rest of the world using modern technology is a much bigger hill to climb,” Campbell said.