Stablecoins Have The Most Risk, FED Vice Chair Says In Call For More Crypto Regulations
Stablecoins have the most risk, FED Vice Chair says in a call for more Crypto regulations. “given the unique characteristics of crypto, there’s a need for ‘creating clear regulatory guardrails.” The FED’s Vice Chair says.
Calls For More Regulation
During a speech at the Clearing House and Bank Policy Institute annual conference on Wednesday, September 7th, the Federal Reserve Vice Chair Lael Brainard made a few statements putting forth her views and arguments on crypto regulations.
Brainard argued that although Cryptocurrencies bear the same risks as traditional finance, it’s important to create specific regulations that cover these digital tokens.
“We have seen that the crypto financial system has all the same risks that we’re very familiar with from traditional finance. But given the unique characteristics of crypto, there’s a need for ‘creating clear regulatory guardrails.’” Brainard says.
In the same speech, the Vice Chair also makes a few statements in regards to crypto’s stablecoins.
“Stablecoins is one of those areas that I think has the most potential for risk if not properly regulated and of course those risks can easily spill into the main core financial system because of the runnable nature of stablecoins.”
Previous Crypto Statements
This isn’t the first time Lael Brainard made statements and suggestions on crypto regulations. Back in July, Brainard also heavily pushed for crypto regulations, claiming that crypto’s volatility “has exposed serious vulnerabilities in the financial system.”
It's right there at the top. Brainard in effect suggests that in addition to the dotcom-ish hype, crypto has the worst elements of shadow banking — "innovation" that's less about doing something productive than about evading prudential regulation 2/ pic.twitter.com/YauZlKe8lq
— Paul Krugman (@paulkrugman) July 9, 2022
“The collapse of Terra and the previous failures of several other unbacked algorithmic stablecoins are reminiscent of classic runs throughout history. New technology and financial engineering cannot by themselves convert risky assets into safe ones.” Brainard said in her speech at the time.
“The recent turbulence and losses among retail investors in crypto highlight the urgent need to ensure compliance with existing regulations and to fill any gaps where regulations or enforcement may need to be tailored.“
With continuous push for regulations, the voice of Lael Brainard as the Vice Chair of the Federal Reserves may end up proving to be significant in the future as it may cause for more movements in regulations and changes in the crypto space.
Related: Here’s Why Crypto Prices Fell After The FED Chair’s Recent Comments!
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