US Federal Reserve Governor Christopher Waller has warned that cryptocurrency prices could drop to zero at some point. “Please don’t be surprised and don’t expect taxpayers to socialize their losses” when that happens, the Fed governor stressed.
Crypto Prices Could Hit Zero, Fed Official Warns
Federal Reserve Governor Christopher J. Waller warned of the danger of investing in cryptocurrency Thursday at the Center for Global Interdependence Conference on “Digital Money, Decentralized Finance, and the Cryptocurrency Puzzle.”
“To me, a crypto asset is nothing more than a speculative asset, like a baseball card. If people believe that others will buy it from them in the future at a positive price, then it will trade at a positive price today,” he described. “If not, its price will drop to zero.”
He added: “If people want to have such an asset, then do it. I wouldn’t, but I don’t collect baseball cards either.” However, the Fed Governor warned:
If you buy crypto assets and the price hits zero at some point, don’t be surprised and don’t expect taxpayers to socialize your losses.
“Several prominent cryptocurrency-related firms have filed for bankruptcy, including payment platforms, exchanges, cryptocurrency lenders, and hedge funds,” Waller noted, adding that both retail and institutional investors have suffered the cryptowinter.
The Fed governor went on to express concern about banks and other financial intermediaries engaging in crypto activity “presenting increased risk of fraud and scams, legal uncertainties, and the prevalence of inaccurate and misleading financial disclosures.” He stressed that banks considering engaging in crypto activities must comply with “know your customer” and “anti-money laundering” requirements.
Waller added:
So far, spillover effects on other parts of the financial system from stress in the cryptocurrency industry have been minimal.
The Fed official is also skeptical of central bank digital currencies (CBDCs). Last October, he said that he “isn’t a big fan” of the Fed issuing the digital dollar, but he is open to someone convincing him that “this is a really valuable thing.”
What do you think about the crypto statements of the governor of the Fed, Waller? Let us know in the comments section.
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