Fed said the crypto regulation needed for retail investors

According to a member of the Board of Governors, new users are the least protected in the field of digital assets

04.06.2022 - 08:05

411

2 min

What’s new? Christopher Waller, a member of the Board of Governors of the US Federal Reserve System (Fed), said that the regulation of the cryptocurrency market is not done to protect sophisticated investors, but “to protect the rest of us.” He made this statement at a virtual event organized by the Swiss National Bank (SNB) and the Center for Innovative Finance (CIF) as part of the SNB-CIF Conference on Cryptoassets and Financial Innovation.

Waller’s speech at the conference

What else did the Fed spokesperson say? According to Waller, if it was only about experienced investors who are comfortable with risk, then controls might not have been necessary.

“New retail users, by definition, do not have crypto experience. They don’t know how to independently buy a crypto asset, how to obtain and protect a private key, how to conduct trades on a DeFi protocol, or how to write a smart contract.”

Waller noted that even experienced investors sometimes try to “socialize the losses” when they are too large. As an example, he cited the situation where users of the Terra ecosystem started seeking restitution after the TerraUST stablecoin collapsed. He added:

“If we want to allow broad access to the crypto ecosystem, then the question isn’t about what experienced users of that ecosystem want—it’s about what the rest of the public needs to have confidence in the ecosystem’s safety.”

Earlier, European Central Bank President Christine Lagarde said that cryptocurrencies are not secured and should be regulated to protect investors from speculation. After that G7 countries called to accelerate the “development and implementation of consistent and comprehensive regulation” of cryptocurrencies.

Author: