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Fed vice president talks about Bitcoin, Altcoin and Earth (LUNA)!

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Fed Vice President Lael Brainard at the Bank of England conference cryptographic resources talked about.

“Crypto-Assets and Decentralized Finance for Financial Stability” The titles of Brainard’s statements are as follows:

“Recent volatility has shown serious vulnerabilities in cryptocurrencies.

As we work to future-proof our financial stability agenda, it’s important to ensure that the regulatory environment covers cryptocurrencies.

New technologies often carry the promise of increasing competition in the financial system, reducing transaction costs and payment times. But in the beginning, new products and platforms are often fraught with risks, including fraud and manipulation. It is important and difficult to distinguish between fraud and value.

We are closely following the latest events where the risks in the system have crystallized and many cryptocurrency investors have lost.

Despite significant investor losses, the crypto financial system still does not appear to be large enough or interconnected with the traditional financial system to pose a systemic risk.

Therefore, we must ensure that similar risks are subject to similar regulatory implications and similar disclosures to help investors distinguish between real and responsible innovation and the false attraction of seemingly easy returns that hide significant risks.

of bitcoin Its price has dropped by up to 75% from its all-time high and dropped by nearly 60% in the three months from April to June. Many of the other major cryptocurrencies experienced even more steep drops over the same period. Contrary to claims that cryptocurrencies are an inflation hedge or an unrelated asset class, cryptocurrencies have plummeted in value and have proven to be highly correlated with riskier stocks and risk appetite more generally.

The collapse of Terra and the previous failures of many other unsupported algorithmic stablecoins resemble classic collapses throughout history. New technologies and financial engineering alone cannot turn risky assets into safe assets.

Recent turmoil and losses among cryptocurrency retail investors, demonstrates the urgency of ensuring compliance with current regulations.

While applying the ‘same risk – same regulatory outcome’ principle, we need to provide basic protections for consumers and investors. According to a number of studies, retail users should be protected from abuse, hidden conflicts of interest and market manipulation.

Conclusion:

Innovation has the potential to make financial services faster, cheaper and more inclusive, and to do so in ways that are unique to the digital ecosystem.

Responsible innovation will require regulations to cover cryptocurrencies and adequately address the new risks associated with new technologies.

It is important that the groundwork is now laid for sound regulation of the crypto financial system before the crypto ecosystem becomes so large or interconnected that it could jeopardize the stability of the broader financial system. “

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