Federal Reserve Chairman says crypto has to be 'brought within' existing financial regulation to 'protect consumers'
Speaking before central bankers during an event organized by the all-powerful Bank of International Settlements, the Federal Reserve Chairman Jerome Powell warned that traditional financial regulation of the new digital asset class is inevitable. In crafting the crypto regulatory principles, the Federal Reserve is guided by the "same activity, same regulation" principle, meaning that even if asset classes like Bitcoin or NFT tokens are outside the traditional banking system and its established regulatory framework, they will be "brought within" in order to "level the playing field, keep trust of users, protect consumers, and all of that." During the panel discussion, Mr. Powell also warned that:
There are potential financial-stability concerns for some products. We don’t know how some digital products will behave in times of market stress.
It remains to be seen how those opinions of the Federal Reserve Chairman on the topic of crypto regulation will translate in financial legislation. The Fed has only issued a "crypto sprint" roadmap last year detailing that more research needs on how to fold the digital asset regulation into the established financial regulation framework. Moreover, President Biden's recent executive order on crypto regulation which was also rather scarce on concrete details, has been welcomed by the digital asset industry precisely because it refused to advise a rigid legislation structure and only advocated for better government agency coordination when it comes to regulating and taxing digital assets.