Crypto Industry Needs Strong Regulation Before It Poses Financial Risks: US Federal Reserve
National and international cooperation are said to be necessary to ensure compliance with existing regulations.
Cryptocurrencies face the same risks as the traditional finance sector, and as such the overall crypto industry must be subject to strong regulation before it poses severe financial risks, said US Federal Reserve Vice Chair Lael Brainard late last week. During a Bank of England conference held in London, Brainard said, “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.”
The cryptocurrency market is currently going through a major plunge in terms of prices. The current slump could be traced back to the de-pegging of the TerraUSD stablecoin, which eventually led to the LUNA investors losing nearly all their money in a matter of days.
Bitcoin, the world’s oldest and most valued crypto coin, is currently trading at around $20,500 at the time of writing, as per CoinMarketCap data. This marks a severe dip from its all-time high of $68,000 as seen in November 2021.
The ongoing crypto meltdown has had adverse effects on nearly all aspects of the sector, with leading crypto exchanges, including Celsius, freezing withdrawals and trading of assets for customers. Several platforms, such as Voyager Digital and Three Arrows Capital (3AC), have also filed for bankruptcy as companies are going through severe cost-cutting procedures, primarily by laying off employees.
As per Brainard, in order to ensure compliance with existing regulations and create new ones, national and international cooperation will be needed.
Brainard added, "Future financial resilience will be greatly enhanced if we ensure the regulatory perimeter encompasses the crypto financial system and reflects the principle of same risk, same disclosure, same regulatory outcome.”
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers
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