Representations of virtual cryptocurrencies are placed on US dollar banknotes in this image dated November 28, 2021. REUTERS/Dado Ruvic
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June 3 (Reuters) – Better regulation of the fast-growing world of crypto-assets is not needed to stop rich people from losing money, but for the good of everyone else, Federal Reserve Governor Christopher Waller said on Friday.
“The main issue with crypto-asset regulation is not how to protect sophisticated crypto investors, but how to protect the rest of us,” Waller said in a remark intended for the handover to the SNB-CIF conference on cryptoassets and financial innovation was prepared in Zurich.
In particular, the goal of regulation is “to protect society from the often irresistible pressure to socialize the losses of resource-constrained investors and to limit the spread of financial strains.”
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In the last five years, crypto assets have grown from a roughly $14 billion niche market to a $3 trillion industry.
Several high-profile collapses in the crypto world of late have led to calls for better guardrails for what is essentially an unregulated market. One reason: their popularity. A recent Fed survey found that about 12% of American adults have used or held cryptocurrencies in the past year, primarily for investment purposes. Other surveys suggest that the number of crypto users is even higher.
In March, President Joe Biden directed the Treasury Department and other agencies to explore how best to regulate the industry, even as central banks around the world — including the Fed — explore the possibility of creating a central bank-backed digital currency .
Waller is among those at the Fed who say they see no reason for issuing a central bank digital currency that would compete with privately backed digital currencies.
On Friday, he set out his reasoning why these privately backed currencies need better oversight, despite industry arguments that markets should be left to their own devices to encourage more innovation.
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Reporting by Ann Saphir Editing by Chizu Nomiyama
Our standards: The Thomson Reuters Trust Principles.
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