Fed’s Brainard likens crypto risks to those faced by banks
NEW YORK — Federal Reserve Vice Chair Lael Brainard on Wednesday said financial risks from cryptocurrencies are similar to the vulnerabilities that banks face
“The crypto financial system has all the same risks that we’re very familiar with from traditional finance — run risk, liquidity risk, maturity transformation risk and lots of risk to investors, particularly retail investors, and it turns out to be highly interconnected,” Brainard told a banking conference.
While those similarities might warrant the enforcement of existing rules on crypto markets, “in some cases, it really means creating clear regulatory guard rails,” she said. “Stablecoins is one of those areas, I think, that has the most potential for risk if not properly regulated, and of course those risks can easily spill into the main core financial system.” (Reporting by Lananh Nguyen and Saeed Azhar; Editing by Leslie Adler)