Federal Reserve Board Governor Christopher Waller on Friday described cryptocurrency as “nothing more than a speculative asset, like a baseball card.”
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In other words, it only has value if others agree that it has value.
“If you buy crypto-assets and the price goes to zero at some point, please don’t be surprised and don’t expect taxpayers to socialize your losses,” he said at a Global Interdependence Center conference, “Interdependence Digital Money, Decentralized Finance and the Puzzle of Crypto.”
Waller said he doesn’t care if people take on risky investments or engage in risky ventures, banks and other financial intermediaries, though “must engage in any activity they do in a safe and sound manner.”
“I’m supportive of prudent innovation in the financial system, while at the same time concerned about banks engaging in activities that present a heightened risk of fraud and scams, legal uncertainties, and the prevalence of inaccurate and misleading financial disclosures,” he said.
For example, banks engaging in crypto-asset-related activities are required to meet “know your customer” and anti-money laundering rules.
So far, there hasn’t been significant spillover from crypto to other parts of the financial system. That’s likely due to the “relatively limited number of interconnections between the crypto ecosystem and the banking system,” he said.
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The U.S. Senate Banking Committee is scheduled to conduct a hearing on Feb. 14 to assess financial system safeguards needed for digital assets.