To fight against suspicious crypto innovation, the US central bank will monitor the innovations of the crypto sector.
Crypto 2022 was a very big disaster, in which several crypto companies & tokens collapsed badly. The top popular crypto companies, which collapsed badly, were FTX, Alameda Research, BlockFi, Celsius, Voyager Digital, Genesis Global Trading, Luna & UST stablecoin, Three Arrow Capital (3AC), crypto-friendly Banks Silvergate Bank & Silicon Valley Bank. In most of the failures, crypto investors lost several billion dollars.
On 9 March 2023, In speaking with the Peterson Institute for International Economics, the Federal Reserve Vice Chairman Michael Barr said that the Central Bank is now increasing its attention on the activities going on in the crypto sector, as millions of people lost their investment.
Michael Barr noted that the majority of the people faced loss in the crypto sector because of the investment in the Ponzi schemes, which are easily running because of the unclear Crypto regulatory environment.
Further, Barr confirmed that the Central Bank is working on the establishment of a new team dedicated to the crypto sector. The new team will monitor new things going on in the crypto sector and further will detect the possible risks associated with the new crypto financial services.
“We (central bank) are also enhancing our supervision of these activities. We are creating a specialized team of experts that can help us learn from new developments and make sure we’re up to date on innovation in this sector.”
The Federal Reserve Vice Chairman confirmed that Fed supervision will only limit illegal or fraudulent crypto activities with the surety of crypto sector innovations.
It is worth to note that the majority of the Central Banks in the world always remain against crypto adoption but here this response by the US central bank is showing that they are aware of the potential crypto & blockchain technology in the financial sector.