Fed Vice Chairman Brainard Urges Faster Crypto Regulation, Praises Stablecoin's Role
Brainard says that if crypto remains unregulated as it is integrated into the broader financial system, it will bring risks of instability of the type that we are currently seeing.
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Regulate now or regret it later, U.S. Federal Reserve Board vice-chair Lael Brainard told a Bank of England conference in London on Friday. Crypto has the same basic risks as traditional finance and needs “strong safeguards,” Brainard said, citing the recent market downturn as proof.
Brainard used the most general terms throughout his speech. She pointed to recent performance issues in cryptocurrency, such as volatility, correlation with risky stocks, liability to bank runs and other risks associated with traditional finance, and over-collateralisation as a price amplifier. stress. As crypto becomes more integrated into the larger financial system, the need for regulation in response to these risks will become more urgent, she said.
Brainard endorsed "the principle of same risk, same disclosure, same regulatory outcome". She also urged international cooperation among financial regulators to address the cross-border reach of the crypto industry. This latest call echoes the findings of a US Treasury Department report released the day before.
Two specific areas were of particular concern to the Fed official. The first was that the involvement of banks in crypto increases the risk to the stability of the basic financial system. Brainard said bank involvement should be encouraged because it "provides an interface where regulators have strong lines of sight." Despite her endorsement of the “same risk, same disclosure” principle, she appeared to argue for different treatment for crypto here, pointing out that a “robust regulatory framework for crypto finance” was needed to advance the strong involvement banks.
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Brainard says that if crypto remains unregulated as it is integrated into the broader financial system, it will bring risks of instability of the type that we are currently seeing.
New
Regulate now or regret it later, U.S. Federal Reserve Board vice-chair Lael Brainard told a Bank of England conference in London on Friday. Crypto has the same basic risks as traditional finance and needs “strong safeguards,” Brainard said, citing the recent market downturn as proof.
Brainard used the most general terms throughout his speech. She pointed to recent performance issues in cryptocurrency, such as volatility, correlation with risky stocks, liability to bank runs and other risks associated with traditional finance, and over-collateralisation as a price amplifier. stress. As crypto becomes more integrated into the larger financial system, the need for regulation in response to these risks will become more urgent, she said.
Brainard endorsed "the principle of same risk, same disclosure, same regulatory outcome". She also urged international cooperation among financial regulators to address the cross-border reach of the crypto industry. This latest call echoes the findings of a US Treasury Department report released the day before.
Two specific areas were of particular concern to the Fed official. The first was that the involvement of banks in crypto increases the risk to the stability of the basic financial system. Brainard said bank involvement should be encouraged because it "provides an interface where regulators have strong lines of sight." Despite her endorsement of the “same risk, same disclosure” principle, she appeared to argue for different treatment for crypto here, pointing out that a “robust regulatory framework for crypto finance” was needed to advance the strong involvement banks.
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