By Ann Saphir
Feb 10 (Reuters) - Federal Reserve Governor Christopher
Waller on Friday had a pair of warnings for those involved in
cryptocurrency assets, telling buyers they could lose their
investments, and banks that they must guard against bad actors
and risks to the financial system.
In recent months the cryptocurrency industry has been roiled
by massive losses for investors, bankruptcies of crypto
exchanges, lenders and payment platforms, and high-profile court
cases including a criminal case against FTX founder Sam
Bankman-Fried. U.S. regulators including the U.S. central bank
have told banks they need to be more careful about fraud risk.
In remarks prepared for delivery to a Global Interdependence
Center conference, Waller said so far the spillover to the
broader financial system has been "minimal," and it is critical
that regulators make sure to mitigate financial stability risks
associated with stress in the crypto industry.
At the same time, he said, banks considering engagement in
cryptocurrency must meet "know your customer" and anti-money
laundering requirements, and must ensure they monitor customers'
business models and risk-management systems so that the bank is
"not left holding the bag" if there is a crypto meltdown
Waller had an even starker warning for traders of
cryptocurrency: as assets that have no intrinsic value,
cryptocurrencies are risky.
"If people want to hold such an asset, then go for it,"
Waller said. "However, if you buy crypto assets and the price
goes to zero at some point, please don't be surprised and don't
expect taxpayers to socialize your losses."
(Reporting by Ann Saphir; Editing by Paul Simao)
