Crypto Crash Does Not Affect The ‘Real’ Economy At All

We can talk about a crypto crash in recent weeks, but it doesn’t seem to have any impact on the economy.

Federal Reserve Chair Jerome Powell says the central bank “doesn’t really see significant macroeconomic implications” from crypto’s volatility. Still, the Fed chairman believes there is a need for a better regulatory framework for cryptocurrencies.

crypto crash

Federal Reserve Chair Jerome Powell testified before the Senate Committee on Banking, Housing and Urban Affairs on Wednesday. They spoke of “the semi-annual report on monetary policy to Congress”.

There was also Senator Kyrsten Sinema. She asked him whether the Fed has been monitoring crypto activity given recent market volatility, and what implications crypto has on the broader economic outlook and monetary policy. “We are following those events very carefully, of course,” Powell replied, explaining, “We don’t really see any significant macroeconomic implications so far.

Regulatory framework

“The main implication is what we’ve been saying for a while, and others have been saying for a while. Namely, there is a real need for a better regulatory framework in this highly innovative new space,” he emphasized.

Interestingly enough, the president of the European Central Bank (ECB) claims otherwise. Christine Lagarde is the boss at the ECB. She says crypto assets and decentralized finance (defi) have the potential to pose “real risks” to financial stability.

“This would be especially true if the rapid growth of crypto asset markets and services continues. And the interconnectedness with both the traditional financial sector and the wider economy is intensifying,” added the ECB chief. What they do agree on is that there should be more rules. sigh.