The Chief Executive Officer of the Federal Reserve Board has stated that as losses build up, the public urges regulation of the crypto market.
New speech At the SNB-CIF conference on crypto assets and financial innovation in Switzerland, Federal Reserve Governor Christopher Waller said that digital asset regulation would ultimately be required as investors continue to suffer significant losses. It states that.
“From a social point of view, if losses are widespread, there are other possible consequences. Those losses are virtually unbearable, politically or morally. Daily investors save lives. Once you start losing, the demand for collective action can grow rapidly, for no reason other than wanting to participate in a hot market.
History shows that there is a demand to “whole” individual investors by socializing individual losses. Just a few weeks ago, after something that could only be described as running in the Terra ecosystem, everyday users seek compensation and even experienced DeFi players are discussing how to reward individual investors. I did. ”
According to Wallace, new and innovative financial technologies are often regulated at the request of the general public in the event of industry-wide negative events that inevitably cost the average investor. I have. He says sector regulation is not about protecting the rich, but about protecting society in general.
“This, in my view, leads to the main reason that society wants to regulate new and poorly understood markets for financial instruments. It does not protect wealthy investors, but with limited resources. It is about protecting society from the often irresistible pressure of socializing investor losses and limiting the spread of financial stress.
When uncertainty or personal information transfers stress from one asset class to another, backstop needs can emerge in isolated failures, not to mention system-wide events. By definition, these financial externalities, which are closely monitored by central banks, including the Fed, can result in uncontrolled losses that have never been registered by innocent parties.
These are the types of losses that the general public is often asked to cover. And when doing so, the general public often demands new oversight and regulation, so the same mistake never happens again. “
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Disclaimer: The opinions expressed in The Daily Hodl are not investment advice. Investors need to do due diligence before making risky investments in Bitcoin, cryptocurrencies, or digital assets. Please note that your transfer and transaction is your own responsibility and any loss you may incur is your responsibility. Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets. Also, Daily Hodl is not an investment advisor. Please note that TheDailyHodl participates in affiliate marketing.
Featured images: Shutterstock / Tithi Luadthong / Natalia Siiatovskaia
