After discussing what fluctuating- value cryptocurrencies and stablecoins are, their differences, and their primary uses and risks, we discuss the factors that led to the crypto boom and crash of 2020-22.  We then look at the role of banks in crypto-related activities, the response of federal and state bank regulators, and the role of crypto in recent bank failures.  We follow with a discussion of Prof. Wilmarth’s recommendations for responding to the risks posed by crypto, including recognizing the Securities and Exchange Commission as the primary federal regulator of most fluctuating-value cryptocurrencies, protecting the banking system by having federal bank regulators prohibit FDIC-insured banks and their affiliates from investing and trading in fluctuating-value cryptocurrencies, and requiring all issuers and distributors of stablecoins to be FDIC-insured banks.  We conclude by looking at recent crypto-related SEC enforcement actions and court decisions and what they mean for future SEC crypto-related activity.

Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation.

To listen to the episode, click here

Professor Wilmarth is the author of an article titled “We Must Protect Investors and Our Banking System from the Crypto Industry,” to be published in the Washington University Law Review.  The article is available here.