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WHY CRYPTO NEEDS REGULATIONS & ITS IMPORTANCE: FED GOVERNOR

WHY CRYPTO NEEDS REGULATIONS & ITS IMPORTANCE: FED GOVERNOR

Legislation is needed to unlock the crypto ecosystem for the general public, United States Federal Reserve Board Governor Christopher Waller told the audience at the SNB-CIF Conference on Cryptoassets and Financial Innovation in Zurich, Switzerland. Financial intermediaries can help manage risk for new crypto users, but they can't eliminate it, says Waller, and new and emerging financial products need public confidence to survive.


The bank official used historical examples to illustrate the relationship between technological innovation, control and asset accumulation. "The new technology - and the lack of clear rules - means that some luck has been created, as others have been lost," Waller said.


Experienced investors are able to operate in unregulated markets and may not need or want to be regulated, Waller continued. He cited a recent Fed study showing that even with crypto-assets exploding in recent years, only 12% of American adults own crypto, and 99% of them hold it for investment purposes.


Mediators in the financial market may want to be regulated because new users with a bad knowledge of crypto can get into conflicts with them. Waller explained: “When day-to-day investors start to lose their livelihood, for no apparent reason and want to participate in the hot market, the demand for collective action can grow exponentially.”


Those demands could grow into a combination of individual losses, such as calls to reimburse small investors who have lost through the collapse of the Terra (LUNC; formerly, LUNA) ecosystem, thought a major banker. That, in turn, leads to an increase in the need for control to prevent the situation from recurring.


To allow wider access to the crypto ecosystem, Waller concluded:


“[...] the question is not about what users of the ecosystem want - it is about what the whole community needs in order to have confidence in the safety of the ecosystem, and for the better or worse, you cannot plan for self-confidence. ”

Source: cointelegraphy 




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