Federal Reserve Vice Chair Lael Brainard said it’s time to add some regulatory teeth to the cryptocurrency industry before it becomes so pervasive that it poses financial stability risks, Reuters reported Friday (June 8).
While speaking at a Bank of England conference in London, Brainard said the recent upheaval in the space has shown that digital assets are as risky as traditional financial assets, according to the report.
“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, per the report.
The ongoing loose regulation of the crypto and stablecoin space has been increasingly discussed as the crypto market buckled last month and stablecoin TerraUSD faded into oblivion at about the same time. Bitcoin has dropped more than 75% from its all-time high of more than $60,000 in November.
Meanwhile, Celsius Network has suspended customer withdrawals and may be looking to restructure. Toronto-listed Voyager Digital and Singapore-based crypto hedge fund Three Arrows Capital both filed for bankruptcy this month, according to Reuters.
“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,” said Brainard, per the report, pushing for national and international cooperation to ensure compliance with existing regulations and to create new ones.