Federal Reserve Chairman Jerome Powell described several risks associated with crypto activity during a hearing before the Senate Committee on Banking, Housing, and Urban Affairs, stating that the Fed sees confusion, fraud, and lack of transparency, and execution risks, while emphasizing that. “We don’t want to see innovation stifled by regulation.”
Fed Chairman outlines risks of crypto activity
Federal Reserve Chairman Jerome Powell answered some cryptocurrency questions Tuesday before the Senate Committee on Banking, Housing and Urban Affairs. During the hearing, the committee’s chairman, Senator Sherrod Brown (D-N.Y.), asked Powell about the risks posed by crypto assets and how he assesses the risks of crypto-related activities by Fed-regulated institutions.
Powell replied, “We have been quite active in this area. We believe that innovation is very important to our economy over the long term.” We don’t want to stifle innovation, and we don’t want regulations that stifle innovation in a way that only favors existing companies, that kind of thing.” The Fed chairman added:
We are seeing what is happening in the crypto world. We are seeing so much confusion, fraud, lack of transparency, execution risk, etc.
The Fed Chairman continued, “What we’ve been doing is making sure that the regulated financial institutions that we oversee and regulate are careful and meticulous about how they interact with the entire crypto space.”
Powell noted that the Federal Reserve, in conjunction with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), has issued several notices warning banks and regulated financial institutions about the risks of cryptocurrencies.
In February, the Fed, FDIC, and OCC jointly issued a warning about crypto liquidity risks; in January, all three regulators issued warnings.” Banking organizations should ensure appropriate risk management, including board oversight, policies and procedures, risk assessment, controls, gates and guardrails, and monitoring to effectively identify and manage risks.”
Image Credits: Shutterstock, Pixabay, Wiki Commons
.
