Fed vice chair Lael Brainard said that cryptocurrencies need to be regulated while they are still under control.
Speaking at the Bank of England Conference, Brainard said that until today, cryptocurrencies have not been linked to the financial system in a way that poses a systematic risk, and added:
“Before the crypto ecosystem becomes large enough or interconnected to pose risks to financial stability, it is important that the foundations are now laid for the sound regulation of the crypto financial system.”
Brainard said he was particularly concerned about this, describing stablecoins and the increased crypto activity of banks as “an increased risk of spillover into the core financial system.”
Brainard did not propose any adjustments. Addressing the cost of financial and crypto services instead, he said:
“When a service appears to be cheaper or more efficient, it is important to understand whether that advantage is due to real innovation or non-compliance.”
The calls for regulation in the crypto industry are increasing day by day. Especially after the collapse of the Terra ecosystem, many regulators continue to make similar calls.
