Federal Reserve Official Notes Waning Cryptocurrency Hype

Cryptocurrency euphoria post-Trump's election win is waning, says Fed's Waller.

The euphoria surrounding cryptocurrencies, which began after Donald Trump’s victory in the U.S. presidential election, is gradually “waning,” according to Christopher Waller, a member of the Federal Reserve Board of Governors.

Under the Trump administration, many participants in the TradFi market increased their share in digital assets, driving their growth, the official noted. However, Congress’s inability to swiftly pass a bill on the cryptocurrency market structure “scared people off” by creating significant uncertainty.

“The hype came mainly from the financial sector. Then there was a big sell-off simply because traditional firms were forced to adjust their risk positions,” Waller clarified. 

The Fed member considers the recent downturn “part of the game.” He advised those not ready to take risks to “stay out” of crypto trading: 

“You get in, you make money, you can lose money — that’s the nature of things.”

Waller also stated that the Federal Reserve will introduce “payment accounts” within the year, aimed at simplifying access for fintech companies and cryptocurrency firms to central bank systems.

According to the official, payment accounts “will foster innovation while ensuring the safety of the monetary system.” Last week, the Fed completed its review of feedback on this proposal. 

Ultimately, the tool for crypto firms was labeled “stripped-down.” Such accounts will have fewer privileges than those of large banks, depriving companies of the ability to earn interest and imposing limits on fund volumes.

Back in January 30, Trump announced the nomination of Kevin Warsh as the next Fed chair following Jerome Powell, whose term ends in May.