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Fed Vice Chairman: “Recent volatility has exposed serious crypto vulnerabilities”

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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.

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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.”

The vice president said that the shortcomings of cryptocurrencies are essentially the same as those of traditional finance and that the sector needs to meet the same safety standards before it becomes large enough to pose a threat to the cryptocurrency. rest of the financial system.

“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.

She suggests that all that happens reinforces the idea of ​​a central bank digital currency from the United States. “could be an advantage for future financial stability.”
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