In a recent speech at a Bank of England conference in London, Federal Reserve Vice Chair Lael Brainard emphasized the importance of crypto regulations around the world. She said that the rising DeFi industry is most likely to take over the economy and if remained unregulated might sabotage the whole financial system.
The cryptocurrency and DeFi market is slowly expanding all over the world. Many countries like UAE and Japan have stepped forward by establishing regulations. However, some governments still refuse to accept this new technology as part of their economy.
The lack of regulations has already caused many issues in the crypto industry with cases piling up in courts with no definite law to solve them. “Innovation has the potential to make financial services faster, cheaper, and more inclusive, and to do so in ways that are native to the digital ecosystem,” said Brainard.
She expressed concerns that in case the government continues to ignore the growing digital economy system, it will slowly integrate with the traditional economy and would sabotage the market stability overall.
The recent crypto market crash and Terra ecosystem collapse have left a great lesson for regulators to push the governments towards establishing defined regulations.
According to Brainard, the crypto system is yet to be involved with the traditional economy but is slowly walking towards it. “This is the right time to establish which crypto activities are permissible for regulated entities and under what constraints so that spillovers to the core financial system remain well contained,” She said.
Will governments around the world take Brainard’s words seriously or dismiss them completely?