Noting the losses that retail investors have suffered in the cryptocurrency market, Federal Reserve Vice Chair Lael Brainard has reportedly reiterated her view that the market should be regulated like traditional finance, with “strong regulatory guardrails.”
The same rules should apply to the crypto market because events have shown that it is subject to the same risks as traditional finance, Brainard said Monday (Nov 14) in an interview with Bloomberg.
Despite claims from members of the industry about the crypto markets being decentralized, they are in fact concentrated and interconnected, so a failure of one platform affects the others, Brainard said in the interview.
“It reinforces I think this need to make sure that crypto finance, because it is no different than traditional finance in the risks that it exposes, needs to be under the regulatory perimeter,” Brainard said, per the report.
In July, it was reported that Brainard said it was time to add some regulatory teeth to the cryptocurrency industry before it becomes so pervasive that it poses financial stability risks.
“It is important that the foundations for sound regulation of the crypto financial system be established now before the crypto ecosystem becomes so large or interconnected that it might pose risks to the stability of the broader financial system,” Brainard said at the time.
In related news, Germany’s chief regulator said Monday that if crypto assets want to be embraced by the mainstream finance world, they need to be regulated the same way as mainstream financial products.
BaFin President Mark Branson said during an event in Frankfurt that the recent crypto crash was fortuitously timed since there are still limited ties between digital assets and traditional finance.
“What was especially disturbing about what we’ve seen in the last days, weeks and months is the consumer protection asset,” Branson said.
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