Federal Reserve Governor Chris Waller believes the post-election hype surrounding digital assets is cooling down. The reason lies in the tight integration with the traditional banking system. At a conference, the official noted that volatility is driven by major players from the traditional sector who are forced to unwind positions.
Waller sees a direct correlation between the entry of institutional investors and price dynamics. A significant amount of capital flowed into the industry following Trump’s victory. The current sell-off is a technical risk adjustment by mainstream firms. Congress exacerbates the situation by delaying the adoption of transparent rules. Consequently, regulatory uncertainty scares off new participants.
Regarding the drawdowns, the Fed representative is blunt: this is the nature of the business. Investing implies risk, and if your nerves cannot handle price swings, it is better not to trade.
Meanwhile, the regulator plans to finalize a blueprint for simplified payment accounts by the end of the year. This will grant fintech and crypto businesses limited access to the central bank system, despite skepticism from banking associations.
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