Crypto Enthusiasm Diminishing as Traditional Finance Integration Deepens, Says Fed's Waller
Federal Reserve's Chris Waller characterizes cryptocurrency market swings as inherent to the space, suggesting mainstream financial institutions may have contributed to the latest downturn.
According to Federal Reserve Governor Chris Waller, the cryptocurrency market excitement that accompanied US President Donald Trump's electoral win has started to diminish as digital assets have become increasingly intertwined with conventional financial systems.
"I think some of the euphoria that came into the crypto world with the current administration, some of that's kind of fading," Waller said at a conference on Monday.
"A lot of it has been brought into the mainstream finance," Waller said. "Then, you know, things have to happen there, so I think there was a lot of sell-off just because firms that got into it from mainstream finance had to adjust their risk positions."
Traditional financial institutions have begun expanding their cryptocurrency holdings during the Trump administration's tenure, providing a boost to the market, but Waller contended that lawmakers' inability to swiftly enact the crypto market structure bill has also "put people off" by creating significant regulatory ambiguity around these financial products.
He further dismissed the latest downturn in the market as simply "part of the game" when dealing with cryptocurrencies. "You get in, you make some money, you might lose some money — that's the nature of the beast."
"Look, prices go up, prices go down — it's just the nature of the business," Waller said. "If you don't like it, don't get in it, that's my advice to everybody."
Bitcoin (BTC) has fallen 45% from its peak of $125,000 in October and is currently trading around $69,500 after a brief crash to under $60,000 on Friday.
Fed "skinny master accounts" to come this year: Waller
Waller indicated that the Federal Reserve plans to implement its proposed "payment accounts" within this year, an initiative designed to provide fintech companies and cryptocurrency firms with restricted access to the central banking infrastructure.
The Fed fielded feedback on the accounts, dubbed "skinny master accounts," up until Friday, with crypto companies backing the plan while banking associations urged caution over the proposal.
"We got a ton of stuff, and we'll have to kind of work through that," Waller said. "If we can get that done reasonably well, I'd like to try to have this done by the end of the year, if possible."
The Fed's proposal would see payment accounts given fewer privileges compared to master accounts commonly owned by major banks, such as removing the ability to earn interest and imposing balance limits.
Waller has previously said that payment accounts would "support innovation while keeping the payments system safe" and are necessary due to "rapid developments" in payments technology.