The Vice Chairwoman reiterates the urgency for policymakers to tighten up regulation on the crypto industry.
Federal Reserve Vice Chairwoman Lael Brainard urged policymakers to toughen up regulatory scrutiny on the crypto industry in a speech given at the Bank of England conference on Friday. Once again, the Chair emphasized the risk of the crypto market crash spilling over to the core financial ecosystem because of the lack of targeted regulation on banking institutions and stablecoin issuers.
“Large crypto players that used leverage to boost returns are scrambling to monetize their holdings, missing margin calls, and facing possible insolvency.” Adding on top of her take on the deepened selloffs, she called DeFi protocols “presenting novel challenges” due to the peer-to-peer nature of such activities, the absence of validated identities, and more. Meanwhile, she expressed concern about the new technology as a facilitator of potential financial crimes:“The permissionless exchange of assets and tools that obscure the source of funds not only facilitate evasion, but also increase the risk of theft, hacks, and ransom attacks.