A high-ranking crypto-skeptic in the U.S. Federal Reserve thinks digital assets are like baseball cards and have no intrinsic value.
Christopher J. Waller, one of the seven members of the Fed’s Board of Governors, says in a new speech that the value of crypto assets is driven “purely by belief.”
“To me, a crypto-asset is nothing more than a speculative asset, like a baseball card. If people believe others will buy it from them in the future at a positive price, then it will trade at a positive price today. If not, its price will go to zero. If people want to hold such an asset, then go for it. I wouldn’t do it, but I don’t collect baseball cards, either. 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.”
Waller does argue that technology related to crypto assets, like smart contracts, could lead to “substantial productivity enhancements” in industries outside of the crypto ecosystem. The Fed governor also says tokenization could be used to trade objects in a way that still offers identity protection.
Waller says he’s not opposed to individuals making “risky investments” in crypto but thinks banks need to operate with a higher standard.
“I’m supportive of prudent innovation in the financial system, while at the same time concerned about banks engaging in activities that present a heightened risk of fraud and scams, legal uncertainties, and the prevalence of inaccurate and misleading financial disclosures. As with any customer in any industry, a bank engaging with crypto customers would have to be very clear about the customers’ business models, risk-management systems and corporate governance structures to ensure that the bank is not left holding the bag if there is a crypto meltdown.”
