{"id":184448,"date":"2021-05-29T15:36:02","date_gmt":"2021-05-29T15:36:02","guid":{"rendered":"http:\/\/radiofree.asia\/?guid=9e04e0f97934c64273c1e5ca25166b95"},"modified":"2021-05-29T15:36:02","modified_gmt":"2021-05-29T15:36:02","slug":"unregulated-cryptocurrency-bubble-could-send-the-economy-into-a-tailspin","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2021\/05\/29\/unregulated-cryptocurrency-bubble-could-send-the-economy-into-a-tailspin\/","title":{"rendered":"Unregulated Cryptocurrency Bubble Could Send the Economy Into a Tailspin"},"content":{"rendered":"\"A<\/a>

Bank regulators are rushing to come up with cryptocurrency rules, according to the Federal Reserve official overseeing financial regulation, but many fear the rule-making comes too late, and the unregulated bonanza may already be on the cusp of crashing and causing a broader recession that would hurt the poor most intensely.<\/p>\n

Fed Vice Chair of Supervision Randal Quarles said on May 25 that his agency and two others — the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) — are taking the lead in what appears to be a scramble to act amid a period of instability with the potential to do serious damage to the rest of the economy. About 1 in 5 financial industry professionals believe that a cryptocurrency downturn could deliver a \u201csalient shock to financial stability\u201d over the next 12 to 18 months, according to a Fed survey<\/a> conducted between February and April.<\/p>\n

Though the rich might lose substantial sums in economic downturns, working-class people invariably suffer the most. The last four<\/a> recessions and the ongoing<\/a> COVID-19 recession<\/a> sent millions of people<\/a> on the margins into poverty, with people of color hit the hardest.<\/p>\n

\u201cWe along with the OCC and the FDIC are engaged right now in what we are calling a \u2018sprint,\u2019\u201d Quarles said at a hearing before the Senate Banking Committee. The OCC is the primary regulator of federally chartered banks, and the FDIC is the agency that guarantees customer savings and oversees state-chartered banks. The Fed oversees bank holding companies and non-bank financial firms, and regulates the stability of the financial system as a whole.<\/p>\n

Quarles said the three agencies have been working \u201cover a relatively concentrated period of time, to pull together all of our work in digital assets, and to have a joint view, a joint framework for their regulation and supervision practices with regard to them.\u201d<\/p>\n

\u201cIt would be premature for me to tell you where that’s going to turn out,\u201d he added<\/a>, \u201cbut this is something that is a high priority not only as a matter of importance, but as a matter of chronology. And we expect to be able to give at least some results from that soon.\u201d<\/p>\n

The sudden \u201csprint\u201d by regulators to examine cryptocurrencies might come too late, with the entire market on the brink of collapse. A sell-off earlier this month saw cryptocurrencies lose some $1 trillion in value in a week, from a peak global market cap of $2.5 trillion on May 11.<\/p>\n

Volatility has been fueled by the structure<\/a> of cryptocurrency markets. Traders can borrow<\/a> 50-125 times the amount of cryptocurrency that they purchase on popular exchanges. Ownership of cryptocurrencies is highly concentrated in the hands of a relatively small number of owners, with some 42 percent of all Bitcoin owned by 2,155 unique purchasers. The value of cryptocurrencies has also fluctuated wildly in recent weeks in response to restrictions imposed by the Chinese government, and tweets from billionaire Elon Musk.<\/p>\n