Lael Brainard thinks there needs to be positive regulation in the sector before things get out of hand.
“Recent volatility has exposed serious vulnerabilities in the crypto financial system,” Fed Vice President Lael Brainard said in a speech in London on Friday.
Brainard said the Fed has “closely monitoring recent events, risks in the system have formed and many crypto investors have suffered losses”.
She says: “Strong regulations will enable investors and developers to build a resilient digital financial infrastructure.”
“Currently crypto trading platforms and crypto lenders engage in activities similar to those in the traditional financial sector without the need for equivalent regulatory compliance.”
The TerraUSD crisis caught the attention of the Fed and other regulators.
Last week, hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy in federal court for the Southern District of New York.