Michael Barr, the Federal Reserve's Vice Chairman for Supervision, said the central bank is taking action to protect the cryptocurrency sector, with the formation of a "specialized team of experts.”

What Happened: Barr on Thursday highlighted the need for digital-assets specialists to stay informed of innovation in the sector. He said, "We need these experts to help us learn from new developments and keep us up to date on best practices in this field."

Silvergate Capital Corp (NYSE:SI) on Wednesday revealed its decision to close down the bank and liquidate its assets, causing concerns of contagion to loom over the FTX  catastrophe; several cryptocurrency companies have sought to reassure the community of their financial stability.

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“Despite recent events, we have not lost sight of the potential transformative effect that these technologies could have on our financial system,” Barr said in an event for the Peterson Institute for International Economics in Washington, reported CoinDesk.

When asked whether the Fed should have identified any issues with cryptocurrency concentration at banks sooner than the banks themselves did, Barr said the agency usually gives small banks more time and space to address those problems than they do with larger banks.

“We tend to have a very light-touch approach to smaller institutions, so there’s more of an impetus on them to actually be paying attention to these new and novel risks, and we need to make sure that they understand that,” he said, as quoted by CoinDesk.

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) were marginally up in the early hours of Friday after slumping on jitters caused by the Silvergate crisis as well as President Joe Biden's new tax proposals for cryptocurrency mining.

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