Federal Reserve Governor Shrugs Off Bitcoin Volatility

Federal Reserve Governor Christopher J. Waller downplayed risks from bitcoin and broader crypto markets on Monday, arguing that digital assets remain largely disconnected from the traditional financial system even as the technology behind them moves into the mainstream.

Speaking at an event hosted by the Global Interdependence Center, Waller framed crypto markets as an extension and competition of everyday commerce rather than an entirely new phenomenon. 

His comments come as crypto markets continue to grapple with regulatory uncertainty in Washington and recurring bouts of volatility that have shaped investor sentiment for years. While bitcoin has become more embedded in institutional portfolios, Waller suggested that price swings remain part of the market’s character rather than a systemic concern.

“Ups and downs in the crypto world have become so common they actually have a name for them: winters,” he said. “It’s part of the game.”

Waller dismissed recent declines in bitcoin’s price as less dramatic when viewed through a longer lens, noting that levels once considered extraordinary are now treated as routine.

“People like, oh my god, bitcoin’s down to 63,000,” he said. “Eight years ago, if you just said it was 10,000 you would have said, oh my god, this is crazy.”

The Fed governor also pushed back against the idea that crypto volatility poses immediate threats to banks or the broader payments system. In his view, crypto remains a separate ecosystem that can experience sharp crashes without triggering spillovers into traditional finance.

“These things are pretty detached from the traditional finance world,” he said. “You can have these big crashes and move volume. The rest of us wake up and we’re fine the next day. Nothing bad’s going on. The banks are open. Your payments are being made.”

Waller said he does not closely monitor crypto markets as part of his day-to-day responsibilities at the central bank, describing the sector as still outside the core of the financial system.

“The banks are open. Your payments are being made,” he said.

Early on in his talk, Waller compared a typical blockchain transaction to buying an apple at the grocery store, with different objects and different rails but the same basic structure of payment, execution, and recordkeeping.

“In the decentralized crypto world, a crypto asset, or digital asset, is the object that people want to buy,” Waller said, pointing to bitcoin and other tokens. The transaction, he argued, relies on new technologies such as blockchains, tokenization, and smart contracts, which he described as tools rather than threats.

“Those are just technologies,” Waller said. “There’s nothing dangerous about them. There’s nothing to be afraid of.”

Waller: Bitcoin and crypto are becoming more commonplace

At the same time, Waller acknowledged that crypto markets have begun to intersect more with mainstream finance, particularly as traditional firms explore blockchain-based infrastructure. He pointed to efforts by financial institutions and even the U.S. Treasury to consider tokenized securities trading that could operate around the clock.

The ability to support 24/7 global trading, he said, represents one of the key innovations of blockchain-based systems compared with legacy banking infrastructure built around business hours and slower clearing cycles.

“These technologies were built to do this globally, 24 by seven from the beginning,” Waller said. “They’re not legacy systems.”

He argued that this constant trading and settlement capability is already forcing traditional financial institutions to improve their own payment systems, especially in cross-border transfers where crypto rails can move value without relying on established networks.

“They’re forcing the big banks, everybody else, to sort of make their payments, especially cross border, faster and cheaper,” he said.

Waller also highlighted the need for clearer regulatory definitions around digital assets, including whether various tokens should be treated as securities or commodities. He said that responsibility lies with Congress, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.

“The bigger problem is clarity,” Waller said, adding that progress in Congress appears stalled. “Everybody thought clarity would come in that would clear the road,” he said. “It doesn’t look like it’s going anywhere anytime soon.”

Waller suggested that some of the recent cooling in crypto market enthusiasm reflects fading expectations that sweeping legislation would arrive quickly.

“The lack of passing of the clarity act has kind of put people off,” he said.

While Waller emphasized that bitcoin and speculative crypto assets are not his focus as a central banker, he offered blunt advice to investors navigating the sector’s volatility.

“Prices go up. Prices go down,” he said. “If you don’t like it, don’t get in.”