The governor of the Federal Reserve, Michelle W. Bowman, emphasized that the rapidly growing technology around cryptocurrency might make it difficult to execute some restrictions.
The Governor of the Federal Reserve has acknowledged that despite the popularity of cryptocurrencies they are still a matter of concern, particularly for the banking industry.
According to Michelle W. Bowman, cryptocurrencies raise a number of challenges, and the regulatory landscape should be prepared to accommodate the developing technology.
However, the governor emphasized that the rapidly growing technology around cryptocurrency might make it difficult to execute some restrictions. For example, Bowell observed that challenges arise when financial sector companies lack experience with legislation to accommodate crypto assets, in addition to the uncertainty of the laws.
“Another area where regulation and oversight are emerging is the involvement of banks in crypto-asset activity. These activities pose a variety of serious concerns. When I consider the growth of supervision and regulation of these activities, I ask myself whether the rules are clear in the current rapidly changing context and whether the rules as they change serve a valid prudential purpose,” said Bowell.
Bowell stated that banks can engage in crypto-related activity but first must grasp supervisory expectations. However, she called for an advocate for greater debate in order to establish the best regulatory approach. According to Bowell:
“The adoption and usage of new technology may raise additional supervisory concerns. However, the best approach to solve these problems and stimulate innovation is for bankers and regulators to communicate before, during, and after the development and use of new technologies.”
Furthermore, the official emphasized that banks must have a clear regulatory framework that can match the risk connected with the price volatility of the cryptocurrency industry.
She emphasized that one thing to watch out for is finding ways to integrate cryptocurrency into banking or push digital assets outside of banks.
SEC’s criticisms over crypto regulations
In this regard, it is worth mentioning that the US SEC has already been chastised for failing to offer clear advice in the regulation of cryptocurrencies, particularly on the classification of commodities and securities.
Critics of the SEC argue that the agency is enforcing crypto supervision against various entities while no specific rules targeting digital currency exist. In this regard, the agency has been chastised over alleged attempts to hinder the growth of cryptocurrencies.