By Barani Krishnan
Investing.com — U.S. regulators’ rhetoric against cryptocurrencies reached new heights on Friday when Federal Reserve Governor Christopher Waller warned that cryptocurrencies could lose all their value one day and that buyers should not s expect to be bailed out.
“If you buy crypto-assets and the price drops to zero at some point, please don’t be surprised and don’t expect taxpayers to socialize your losses,” Waller said in a statement. Powerful speech aimed at enlightening Americans about the unknown risks of digital coins and the frequent abuse of investors by space funds and entrepreneurs.
The price of , the most popular cryptocurrency, fell more than 4% on the day, hovering around $21,700, after Waller’s speech.
The fell to a two-year low of around $15,500 in November as U.S. regulators, including the Securities and Exchange Commission, which oversees the exchange, came down hard on the crypto sector after the collapse of FTX, an exchange that facilitates trading in digital coins.
Prosecutors have accused FTX founder Sam Bankman-Fried of stealing billions of dollars in client funds to make up for losses at his hedge fund, Alameda Research, which acted as a back-up funder for the exchange. Bankman-Fried denied any foul play.
The FTX saga initially wiped out some $1.3 trillion in digital coins, although bitcoin rebounded 40% in January from November lows. “It’s clear…the cryptocurrency devotees are keeping the faith,” The New York Times said in a commentary in January.
The collapse of FTX also caused other brands in the crypto space to file for bankruptcy, such as Celsius Network and Genesis Global Capital’s lending unit.
Besides Bankman-Fried, other people have also been charged. Last Tuesday, a former chief product officer of another cryptocurrency exchange, Coinbase (NASDAQ:), pleaded guilty to insider trading by using confidential information about assets scheduled to be listed on the exchange, said said the Department of Justice.
Waller said while the impact of “cryptocurrency industry stress” on the financial system has been minimal, mitigating the fiscal stability risks associated with it is critical.
He added that banks that deal with crypto customers must comply with “know your customer” and anti-money laundering regulations.
Financial regulators, including those in New York State, have also issued multiple guidelines for cryptocurrency investors and operators in recent months to avoid further debacles within the cryptocurrency market. sector.