St. Louis Fed President James Bullard warned Monday that investors should be careful when investing in cryptocurrencies, and dismissed most of them as “worthless.”
In an interview with Yahoo Finance, Bullard admitted that digital currencies that are able to “facilitate transactions that are difficult to make in conventional currencies” do have a place alongside fiat currencies.
However: “We have a couple of thousand of these around, most of them are worthless,” he said.
Bullard encouraged investors to be aware of the inherent risks in cryptocurrency investing — particularly concerning price volatility — and to “be careful.”
“I think for the most part, people like going into this with eyes wide open, they’re certainly not blind to the idea that this is a volatile area,” he told Yahoo Finance.
Still, Bullard said there are “lots of interesting things going on in this space,” and added that “of course the Fed is also looking at a Fed coin.”
“We’ve got a lot going on, watching this very carefully,” he said.
Separately Monday, Fed Gov. Lael Brainard said the central bank is keeping a close eye on China’s efforts to develop a digital currency, and said it’s critical that the Fed be “at the table” in any development of standards for central-bank digital currencies.
Last week, Fed Chairman Jerome Powell said the central bank will ramp up its exploration of a digital dollar this summer, stressing it would not be a replacement for cash.
Crypto prices have been on a wild ride this year, but have fallen sharply over the past month. After tumbling over the weekend, the prices of bitcoin BTCUSD, -1.42% and dogecoin DOGEUSD, -1.76% rallied early Monday, though pulled back slightly by Monday night. While cryptocurrencies trade 24 hours a day, each trading session ends at 5 p.m. Eastern.