- Federal Reserve Board of Governors member Christopher Waller recently explained regulating bitcoin and cryptocurrency markets is to “protect the rest of us.”
- The board member explains that fear of unstable markets for new investors inherently weakens the ecosystem as users look to socialize losses.
- The governor said the space is evolving from assets like bitcoin “meant to provide an alternative means of payment,” to risky financial exposure.
Christopher Waller, a member of the Federal Reserve Board of Governors, said regulation of bitcoin and the broader cryptocurrency market is not to protect experienced investors in the space, rather “it’s how to protect the rest of us.”
The governor explained that the explosive growth experienced in the industry over the past five years was “a stretch of incredible growth.” These notable levels of growth, Waller explains, led to quick recognition from both the public and the government. This highly publicized recognition of economic growth in the industry has caused a deviation away from the likes of bitcoin which is “meant to provide an alternative means of payment,” towards practices often referred to as “decentralized finance, or DeFi,” according to the governor.
“By law or by practice, many crypto-related products and activities fall between the cracks of traditional legal and regulatory structures, outside the so-called ‘regulatory perimeter,” Waller explained. “In that environment, the normal backstops and safety nets of traditional finance do not necessarily or reliably apply.”
Governor Waller went on to explain that many investors currently operating within the space view regulation through a lens of “regulation isn’t just unnecessary, it’s counterproductive.” Were it only these experienced investors comfortable with the risk then regulation might not be necessary.
“New retail users, by definition, do not have crypto experience,” Waller said. “They don’t know how to independently…
