Christopher Waller, the governor of the Federal Reserve, has said that it will be morally unacceptable for cryptocurrency investors to keep making huge losses. Waller added that the moral intolerance would be higher in cases where investors had little knowledge of crypto and lost all their money.
Losses as high as Terra demonstrate the need for regulation
Waller made this statement in a speech in Switzerland on Crypto assets and Financial innovation at the SNB-CIF Conference. He added that losses as high as with the Terra ecosystem could bring the need for regulation.
According to Waller, it calls for action when losses become widespread. He states that such losses make the issue morally, practically, and politically intolerable. Moreover, it becomes a problem when investors lose their lifesaving because they want to participate in hot markets, thus could lead to a call for action.
Walker states that contrary to popular belief, regulations are not there to protect high net worth participants. Instead, they also work to protect smaller investors from making high losses. Additionally, the crypto market is on the rise, despite being poorly understood and new, which necessitates regulations.
Although many established crypto investors are against regulating the industry, Waller believes it is crucial. Despite this, he acknowledges their worries that setting up cryptocurrency rules could stifle innovation and drive costs. However, Waller thinks it must be done to protect investors.
The government should protect investors
Waller advises that regulation should mainly focus on educating investors. He notes that many cases were due to poor management practices, bad financial advice, and insufficient due diligence.
Unfortunately, people who make losses have a hard time fighting for their rights as it costs too much. For this reason, the Federal Reserve Governor believes the government’s intervention is necessary.
Waller’s views are not just his own, as three months previously, the U.S President, Joe Biden, had signed an executive order for federal agencies to design measures regulating cryptocurrency development.
In other countries, central banks have decided to issue their own central bank digital currencies to control the influence of digital assets. Waller is not supportive of this measure. He notes that one advantage of the system is that the currencies will be governed according to the central bank’s policies. However, he questions if this will help in any way.