“We have seen that the crypto financial system has all the same risks that we’re very familiar with from traditional finance,” Federal Reserve Vice Chair Lael Brainard said in a speech at the Clearing House and Bank Policy Institute 2022 annual conference on Wednesday. But given the unique characteristics of crypto, there's a need for “creating clear regulatory guardrails.”

She also reiterated the risk of stablecoins in her speech. She predicted there will be a lot more of such tokens created by the private sector in the future. “Stablecoins is one of those areas that I think has the most potential for risk if not properly regulated and of course those risks can easily spill into the main core financial system because of the runnable nature of stablecoins,” she said.

By Amy Liu