Federal Reserve Chairman Jerome Powell outlined several risks related to cryptocurrency during a hearing before the Senate Committee on Banking, Housing, and Urban Affairs. Stating that the Fed sees confusion, fraud, lack of transparency, and risk in the crypto space, he emphasized: “We don’t want regulation to stifle innovation.”
Fed Chairman Outlines Risks in Crypto Activities
Federal Reserve Chairman Jerome Powell answered some questions about cryptocurrency before the Senate Committee on Banking, Housing, and Urban Affairs on Tuesday. During the hearing, Senator Sherrod Brown (D-OH), chair of the committee, asked Powell about the risks posed by crypto assets and how the Fed is assessing the risks of cryptocurrency-related activities by its supervised institutions.
“We have been quite active in this area,” Powell responded. “We believe that innovation is very important over time for the economy. We don’t want to stifle innovation, we don’t want regulation to stifle innovation in a way that only favors incumbents, that sort of thing.” The Fed chair added:
We are looking at what has been happening in the crypto space. What we see is quite a bit of confusion, we see fraud, we see lack of transparency, we see risk taking, many, many things like that.
“So what we’ve been doing is making sure that the regulated financial institutions that we supervise and regulate are careful, they’re very careful in how they interact with the entire crypto space,” the Fed chair continued.
Powell noted that the Federal Reserve has issued several joint advisories with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), warning banks and regulated financial institutions about the risks of cryptocurrencies.
In February, the Fed, FDIC, and OCC jointly warned about the liquidity risks of cryptocurrencies. In January, the three regulators warned: “Banking organizations must ensure proper risk management, including board oversight, policies, procedures, risk assessments, controls, security gates and barriers, and monitoring, to identify and manage risks effectively.
What do you think about the statements of the president of the Federal Reserve, Jerome Powell, on cryptocurrencies? Let us know in the comments section.
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