Federal Reserve Governor Michelle W. Bowman has acknowledged that despite the growth of cryptocurrencies, they are a concern, especially when it comes to the banking sector.
According to Bowell, cryptocurrencies raise several issues and the regulatory outlook should be ready to welcome the emerging technology, it said during a session with the Institute of International Finance (IIF) on September 30.
The governor, however, pointed out that the rapidly changing technology around cryptocurrencies can make it difficult to implement certain rules. For example, Bowell noted that challenges arise if financial industry players lack regulatory experience in responding to crypto assets alongside ambiguity in laws.
“Another area where regulation and supervision continue to evolve relates to banks engaged in crypto-asset activities. These activities raise a number of important questions. When I think about the evolution of the supervision and regulation of these activities, I wonder if the rules are clear in today’s rapidly changing environment and if the rules as they evolve serve a legitimate prudential purpose” , Bowell said.
During the session, Bowell noted that banks can engage in crypto-related activities, but must first understand oversight expectations. However, she called for more dialogue to find the right regulatory perspective. According to Bowell:
“The adoption and use of new technologies can present new supervisory concerns, but the best way to address these concerns and encourage innovation is a dialogue between bankers and supervisors before and during the development and implementation of these technologies.
Furthermore, the official pointed out that banks must have a clear regulatory framework that can match the risk associated with the price volatility of the cryptocurrency industry.
She pointed out that one of the considerations is finding ways to integrate crypto into the banking industry or push digital assets out of the banking industry.
SEC criticisms of crypto regulation
In this line, it should be noted that the United States Security Exchange Commission (SEC) has already been criticized for not providing clear guidance in the regulation of cryptocurrencies, in particular on the classification of commodities and securities. .
Critics of the SEC claim that the agency implements crypto surveillance against different entities, but there is no specific law targeting digital currencies. Along these lines, the agency has been criticized for its alleged plans to stifle the growth of cryptocurrencies.
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