Fed’s Waller calls crypto ‘nothing more than a speculative asset’
Federal Reserve Governor Christopher Waller said Friday he views crypto as a speculative asset that's worth whatever the next person is willing to pay for it and says he, personally, wouldn't hold it.
"To me, a crypto-asset is nothing more than a speculative asset, like a baseball card," Waller said in a speech at a crypto conference at the Global Interdependence Center in La Jolla, California.
"If people want to hold such an asset, then go for it," Waller said. "I wouldn't do it, but I don't collect baseball cards, either. However, if you buy crypto-assets and the price goes to zero at some point, please don’t be surprised and don’t expect taxpayers to socialize your losses."
Waller said it's critical to make sure that the risks associated with crypto are mitigated, but that regulators shouldn't "unduly limit" the development and potential future uses of any positive features of crypto.
Waller said any bank engaging with crypto customers would have to be very clear about the customers' business models, risk-management systems, and corporate governance structures to ensure that the bank is not left holding the bag if there is a crypto meltdown.
When it comes to a central bank digital currency, Waller said for him, the major question is what is a failure in the current U.S. payment system that only a CBDC can solve. He said this question it hasn’t been answered yet.
"I haven’t been a big fan of CBDC,” said Waller. "It could be in some countries it’s valuable. But for the U.S., I just don’t see the value proposition for us."
Waller's comments come after the SEC on Thursday reached a settlement with crypto exchange Kraken over its staking program which will see Kraken pay a $30 million fine and shutter its crypto staking service for U.S. customers.
Late last month, the Fed denied Wyoming-based crypto bank Custodia's application to become a member of the Fed's system, noting the bank's focus on crypto created significant safety and soundness risks and therefore didn’t meet requirements under the law.
The Fed also issued a policy statement on crypto last month, making clear that uninsured and insured banks regulated by the Fed will be subject to the same limits on activities, including crypto.
Banks would be allowed to provide safekeeping services, custody, for crypto-assets if done in a way the Fed views a safe and sound manner and in compliance with consumer and anti-money laundering laws.
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