Fed Board Member: Cryptocurrency Market Volatility Is High, Traditional Financial Risks Are More Significantly Amplified in Pullbacks

Federal Reserve Board Governor Chris Waller discussed recent volatility in the cryptocurrency market at an economic forum. He stated that as the market gradually aligns with the traditional financial system, the crypto boom driven by Trump’s election is fading; at the same time, the lack of passage of the cryptocurrency market structure bill in Congress has increased market uncertainty. He bluntly said that large price swings are normal in the crypto market, and if you don’t like volatility, don’t enter.

Crypto Boom Recedes, Post-Election Enthusiasm Dims

Waller indicated that the optimistic atmosphere in the cryptocurrency market driven by the presidential election has begun to fade. The excitement that once surged into the crypto market due to political changes is now cooling down, and the market is no longer as filled with high expectations as it was immediately after the election.

Traditional Finance Enters, Risk Adjustment Triggers Selling Pressure

Waller pointed out that more and more traditional financial institutions are entering the crypto asset space, gradually integrating the crypto market into mainstream financial operations. In this context, when these institutions need to manage risks or adjust their investment positions, it can impact the crypto market. He believes that part of the recent selling pressure is caused by these traditional financial institutions adjusting their risk positions.

Regulatory Deadlock Affects Market Confidence

Waller also mentioned that the U.S. Congress’s failure to pass legislation related to the structure of the cryptocurrency market keeps regulatory directions unclear. The lack of finalized regulations makes market participants uneasy about how products will be regulated in the future, and this uncertainty causes some investors to hesitate to enter or increase their investments.

Price Volatility Is Normal, Waller Says

Regarding the recent sharp decline in cryptocurrency prices, Waller believes this is not abnormal but a normal characteristic of the crypto market. He described that entering this market means the potential to make money or lose money, and price fluctuations are inherent to digital assets; if one cannot accept such volatility, they are not suited to participate.

Simplified Main Account Launch Imminent, Limited Permissions with Innovation

Waller also discussed the Fed’s planned “payment accounts,” commonly known as “simplified main accounts,” which aim to allow fintech companies and crypto industry players to access the central bank system under limited conditions. The Fed has completed consultation, and many crypto firms have expressed support, while banking groups remain cautious about risks.

Waller stated that if the system design proceeds smoothly, the plan could be finalized by the end of this year. These accounts will have restricted permissions, including no interest payments and account balance limits. He emphasized that the Fed’s goal is to maintain the safety and stability of the financial system while leaving room for innovation in payment technology, fintech, and the crypto industry.

(The Federal Reserve is soliciting public opinions on new “payment accounts,” gradually easing regulations on crypto startups and banking supervision)

This article, “Fed Governor: Cryptocurrency Market Volatility Is Large, Traditional Financial Risk Adjustments Are Amplified,” first appeared on Chain News ABMedia.