Federal Reserve Board Governor Christopher Waller on Friday described cryptocurrency as "nothing more than a speculative asset, like a baseball card." In other words, it only has value if others agree that it has value. "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," he said at a Global Interdependence Center conference, "Interdependence Digital Money, Decentralized Finance and the Puzzle of Crypto." Waller said he doesn't care if people take on risky investments or engage in risky ventures, banks and other financial intermediaries, though "must engage in any activity they do in a safe and sound manner." "I'm supportive of prudent innovation in the financial system, while at the same time concerned about banks engaging in activities that present a heightened risk of fraud and scams, legal uncertainties, and the prevalence of inaccurate and misleading financial disclosures," he said. For example, banks engaging in crypto-asset-related activities are required to meet "know your customer" and anti-money laundering rules. So far, there hasn't been significant spillover from crypto to other parts of the financial system. That's likely due to the "relatively limited number of interconnections between the crypto ecosystem and the banking system," he said . 1:16 PM ET: Event concludes. 1:15 PM ET: While crypto assets are highly speculative, "the blockchain technology is a fascinating idea." The question: is Does blockchain have a use for outside of crypto?, he asked. "I say let's find out," Waller said. 1:10 PM ET: Waller said a central bank digital currency may make sense in some other countries, but he doesn't see it as a value proposition in the U.S. Still, any decision on proceeding with a CBDC would need to come from Congress, he said. 12:53 PM ET: Decentralized developed as peer-to-peer trading of crypto, without an intermediary, Waller said. "Original DeFi was a world of no trust, peer-to-peer trading." The DeFi world is moving away from the true original intent, he said, as more intermediaries are get involved. Update at 12:48 PM ET: Waller didn't comment on the economy or monetary policy in the prepared speech. Q&A section of presentation has begun. The U.S. Senate Banking Committee is scheduled to conduct a hearing on Feb. 14 to assess financial system safeguards needed for digital assets.
