A senior-level sceptic at the U.S. Federal Reserve believes that digital assets have no intrinsic worth, similar to baseball cards.
In a recent lecture, Christopher J. Waller, one of the seven members of the Fed’s Board of Governors, asserts that the value of crypto assets is “purely based on belief.”
“In my opinion, cryptocurrency is little more than a collectable baseball card in the world of financial speculation. If individuals feel that others will purchase it from them at a positive price in the future, then the asset will trade at a positive price now. Otherwise, its price will drop to zero. If individuals choose to hold such an asset, then they should do so. I would not do so, but I also do not collect baseball cards. However, if you purchase crypto assets and the price drops to zero, please do not be shocked and do not expect the government to subsidise your losses.”
Waller argues that technologies associated with crypto assets, such as smart contracts, might result in “significant productivity increases” in companies beyond the crypto ecosystem. The Fed governor adds that tokenization might be used to exchange items in a manner that preserves anonymity.
Waller is not opposed to people making “risky investments” in cryptocurrencies, but he believes that banks must adhere to a higher standard.
“I favour cautious innovation in the financial system but am worried about banks participating in activities that increase the danger of fraud and scams, legal uncertainty, and the frequency of erroneous and misleading financial reports. As with any other client in any sector, a bank interacting with crypto customers would need to have a thorough understanding of their business models, risk-management systems, and corporate governance structures to avoid being left holding the bag in the event of a crypto crisis.
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