Christopher Waller, Speech: Thoughts on the Crypto Ecosystem

“Before diving into today’s talks, which will touch on various parts of the crypto ecosystem, I’d like to clearly define some concepts to ensure we’re all talking about the same things. I think of the crypto ecosystem as consisting of three parts:”

• “A crypto-asset, which generally refers to any digital asset implemented using cryptographic techniques that is being traded;”
• “A database management protocol used to record trades, commonly referred to as the blockchain, which includes both permissioned and permissionless distributed ledger technologies; and”
• “Technology that directly facilitates trading crypto-assets; this includes smart contracts and tokenization as a form of data privacy.”

“So far, spillovers to other parts of the financial system from the stress in the crypto industry have been minimal. The lack of spillovers to date may be attributable in part to the relatively limited number of interconnections between the crypto ecosystem and the banking system. While it is critical that we ensure that the financial stability risks associated with crypto-assets are mitigated, it is important that we keep the various parts of the crypto ecosystem distinct in our minds as the debate about if and how to regulate crypto rolls on. Doing so will ensure we do not unduly limit the development and potential future uses of the positive features of the crypto ecosystem.”

In the Q&A segment that followed Waller’s speech, monetary policy and the economy were not discussed.