Fed's Brainard: Crypto regulation needed 'now' before it's too late

Regulation for cryptocurrency is needed "now" before the decentralized space potentially becomes a bigger issue down the road, Federal Reserve Vice Chair Lael Brainard said Friday in a prepared speech at a Bank of England Conference. “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,” Brainard said. “It is important that the foundations for sound regulation of the crypto financial system be established now before the crypto ecosystem becomes so large or interconnected that it might pose risks to the stability of the broader financial system.”Brainard's remarks come as “recent volatility has exposed serious vulnerabilities in the crypto financial system,” including the collapse of algorithmic stablecoin TerraUST (UST-USD) as well as some formerly prominent crypto-related firms like Celsius, Three Arrows Capital and Voyager Digital (OTCQX:VYGVF). Bitcoin (BTC-USD), the world's largest digital token by market cap, is off around 65% from its November peak of $68.9K amid investors' flight to safety in a backdrop of recession fears and tighter financial conditions. Nevertheless, the crypto space is still not controlled by one singular regulatory regime which could bode poorly for financial stability. “Strong regulatory guardrails will help enable investors and developers to build a resilient digital native financial infrastructur...