The calls for crypto regulations have reached a fever pitch. On Friday, Federal Reserve Governor Christopher Waller lent his voice once again to the discussion.
Waller Says Proper Regulations Are Meant To Protect The Retail Traders
On Friday, Federal Reserve Governor Christopher Waller once again called for clear regulations of the crypto markets. Moreover, Waller clarified that clear regulations in the crypto space are necessary to protect retail traders.
“The main issue in crypto-asset regulation isn’t how to protect sophisticated crypto-investors; it’s how to protect the rest of us,” Waller said while speaking at the SNB-CIF Conference on Cryptoassets and Financial Innovation in Zurich. Furthermore, Waller added that the purpose of regulations would be “to protect society from the often-irresistible pressure to socialize the losses of investors with limited resources, and to limit the spread of financial stress.”
Notably, Waller’s statements mirror statements from the US Treasury Secretary Janet Yellen in April. “When regulation fails to keep pace with innovation, vulnerable people often suffer the greatest harm,” said Yellen speaking at the American University’s Kogod School of Business Center for Innovation.
Why Calls For Regulations Have Intensified
It is worth noting that at the moment, the crypto markets are widely unregulated, as regulators and lawmakers are still trying to understand the uniqueness of the nascent market. However, the rise in crypto fraud and the recent collapse of the Terra ecosystem have brought a sense of urgency to creating clear and comprehensive regulations for the space.
The headline-grabbing Terra collapse saw over $40 billion wiped from the crypto markets, leaving investors with nothing. In addition, Terra’s collapse exposed the vulnerability of stablecoins to investor runs.
Following recent incidents, regulators have called for lawmakers to create clear regulations, even as regulators say a global crypto regulatory body may be in the works. It is worth noting that Terra has launched a new blockchain in hopes of reviving the ecosystem, but several top investors remain skeptical.