Michelle Bowman, a governor of the Federal Reserve System, has expressed concerns about the risks faced by financial institutions due to uncertainty surrounding digital assets and rising interest rates. During her speech at the Salzburg Global Seminar, she emphasized the need for increased attention from international regulators regarding the supervision of modern banking operations and digital assets. Bowman highlighted a regulatory gap in the banking sector when it comes to new technologies. She also expressed worry that banks may put themselves at risk by relying on vague statements that lack binding force. Bowman pointed out the dangers of the current regulatory environment and emphasized the importance of engaging with innovative and traditional activities to effectively regulate the banking sector.
Moody’s has warned that without specific legislation addressing digital assets in the United States, investors and companies may shift their focus to more crypto-friendly countries. Members of Congress have proposed legislation that aims to classify certain crypto assets as digital commodities, thereby preventing the SEC from blocking the registration of a regulated alternative trading system for digital asset trading. Bowman stressed the need for clear guidance for financial institutions on innovative technologies, as navigating higher interest rates could have significant consequences for banks.
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