Vice Chairwoman of the US Fed Brainard Dislikes Recent Events in Crypto
- Before things spiral out of control, Lael Brainard argued that the sector needs rigorous regulation.
- The Fed and other regulators have taken notice of TerraUSD’s collapse, which Brainard compared to previous financial runs.
- The vice chairwoman asserts that before it poses a threat to the rest of the financial system, it must fulfill the same safety criteria as traditional banking.
The Fed’s focus on the crypto sector is no surprise given the increased scrutiny digital assets have been under in recent months. The volatility of the sector, combined with the lack of regulation and oversight, has made it a prime target for bad actors looking to take advantage of investors.
In her speech, Brainard outlined several areas where she believes the crypto sector needs to improve to protect investors and ensure that digital assets are being used for legitimate purposes.
First, she called for greater transparency around pricing and trading practices. Second, she said there needs to be better mechanisms in place to prevent fraud and money laundering. And third, she called for improved consumer protection measures, such as clearer disclosures about the risks associated with investing in digital assets.
The bottom line is that the Fed is paying close attention to the developments in the crypto space and is concerned about the potential risks posed by these assets. Until these issues are addressed, it’s unlikely that we will see a fully-fledged digital dollar from the central bank.
According to a transcript of the speech, Brainard stated that the Fed has been
closely monitoring recent events where dangers in the system have crystallized, and many crypto investors have experienced losses.” “Strong regulatory guardrails will assist enable investors and developers to establish a durable digital-native financial infrastructure.
The vice chairwoman asserts that before the industry grows to a size where it poses a threat to the rest of the financial system, it must fulfill the same safety criteria as traditional banking because crypto has many of the same flaws as that industry.
All of this, she asserted, supports the notion that an American central bank digital currency “may be an advantage for future financial stability.” A government token of this nature might significantly affect the private stablecoin market.