The top regulatory official of the Federal Reserve says that while crypto assets can potentially transform the financial system, the technology still requires appropriate guardrails.
In his speech at the Peterson Institute for International Economics on Thursday, Fed Vice Chairman Michael Barr says the central bank is enhancing its supervision of crypto-related activities as recent events in the industry saw millions of people losing billions of dollars worth of investments.
“In the absence of regulatory compliance, customers don’t have the information they need to assess and mitigate their risks. Investors do not have the structural protections they have relied on for many decades. As a result, many have been victims of classic cases of fraud and abuse – some appropriately classified as ‘Ponzi schemes’ under a high-tech veneer.”
As it establishes safety protocols for the crypto market, Barr says the central bank is putting together a team of crypto experts to ensure that it is kept updated on the new developments and innovations within the sector.
“In addition to sharing what we learn with the public on an ongoing basis, we are also enhancing our supervision of these activities. We are creating a specialized team of experts that can help us learn from new developments and make sure we’re up to date on innovation in this sector.”
He says the goal is to balance innovation and safeguards that can benefit both the consumers and the financial system.
“As we continue our efforts, we will work to support innovation by establishing the guardrails essential for sustainable, safe, and transparent markets.”
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