Federal Reserve Governor Christopher Waller said that he expects the public to demand the regulation of cryptocurrencies such as Bitcoin (CRYPTO: BTC) due to the massive losses suffered by investors.
What Happened: Waller talked about cryptocurrency and its future regulation at the Swiss National Bank Center For Innovative Finance Conference on Cryptoassets and Financial Innovation in Switzerland, according to a Friday Federal Reserve statement.
"From a social perspective, there is another possible outcome when losses become widespread: those losses become practically, politically or morally intolerable," Waller said. "When everyday investors start losing their life savings, for no reason except wanting to participate in a hot market, demands for collective action can mount quickly."
He noted that, "History shows that there will be demands to make individual investors ‘whole’ by socializing their individual losses."
Waller point to "what can only be described as a run on the Terra ecosystem," saying that the monumental losses led "even experienced DeFi players" to discuss ways to compensate retail investors.
See Also: How To Earn Free Crypto
Why It Matters: Waller expressed the belief that innovative financial technology will often be regulated following a negative event that results in a public request for the regulators to get involved.
According to him, "society wants to regulate new and poorly understood markets for financial products," and it is "not to protect high-net-worth investors but to protect society from the often-irresistible pressure to socialize the losses of investors with limited resources, and to limit the spread of financial stress."
Photo: Created with an image from stantontcady on Flickr
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