Federal Reserve Downplays Bitcoin Volatility as Crypto Adoption Grows

In Brief

• The Fed says Bitcoin volatility isn’t a systemic risk.
• Crypto crashes don’t affect banks or payments.
• Regulatory clarity remains the key issue.

Bitcoin (BTC)’s volatility may dominate headlines, but from the Federal Reserve (Fed)’s perspective, it’s still not a systemic problem.

That was the message from Christopher Waller at a conference in La Jolla, California, hosted by the Global Interdependence Center on February 9. He said cryptocurrency market crashes can happen without spilling into the banking system or disrupting everyday payments. As he stressed:

“Prices go up. Prices go down. It’s just the nature of the business. If you don’t like it, don’t get in.”

Why the Fed Isn’t Losing Sleep Over Bitcoin

Waller argued that Bitcoin and crypto markets remain largely detached from traditional finance, even as the technology behind them becomes more widely used.

In his view, crypto’s boom-and-bust cycles are a feature of the market, not a threat to financial stability. Crypto downturns, he said, don’t stop banks from opening or payments from clearing. As he said:

“You can have these big crashes and move volumes. 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.”

That separation is why crypto volatility doesn’t currently factor into his day-to-day work as a central banker.

Bitcoin’s Price Drops Look Different With Time

Waller also dismissed panic around recent Bitcoin pullbacks, arguing that context matters. In his words:

“People are like, ‘Oh my god, Bitcoin’s down to $63,000.’ (…) Eight years ago, if you’d have said it was $10,000, you would have said, ‘Oh my god, this is crazy.’”

From the Fed’s perspective, large price swings are now normalized behavior in a market that has matured but remains speculative.

Crypto Tech ≠ Financial Threat

Though Waller downplayed Bitcoin’s risks, he didn’t dismiss blockchain technology itself. He compared a blockchain transaction to buying groceries: different rails, same basic structure of payment, execution, and record-keeping.

Blockchains, tokenizations, and smart contracts, he said, are tools, not dangers:

“There’s nothing dangerous about them. There’s nothing to be afraid of.”

In fact, he acknowledged that crypto rails are already forcing banks to improve, especially for cross-border payments where speed and cost matter.

The Real Issue: Regulation Is Stuck

Where Waller did see a problem was regulation, or the lack of it. He said uncertainty around whether crypto assets should be treated as securities or commodities remains unresolved, and that Congress has failed to deliver the clarity markets expected.

“The bigger problem is clarity, which is the digital asset classification or securities, commodities, all that,” Waller said, adding that expectations for sweeping crypto legislation have cooled as progress stalls in Washington.

What This Means For Investors

Waller’s message is pragmatic, rather than being pro- or anti-Bitcoin. From the Fed’s standpoint, crypto crashes don’t threaten banks, volatility is expected as opposed to alarming, blockchain tech is pushing finance forward, and regulation is the bottleneck, not price swings.

For investors, it simply means that Bitcoin’s volatility is your risk to manage, not the Fed’s problem. Or, as Waller put it: “If you don’t like it, don’t get in.”