Joe Biden chooses crypto skeptic as his top economic adviser

President Joe Biden is set to name Federal Reserve Vice Chair Lael Brainard as his top economic adviser on Feb. 15. 

The White House has been evaluating several senior officials in the federal government to replace National Economic Council Director Brian Deese, including deputy Treasury Secretary Wally Adeyemo and Brainard. Brainard, a Fed governor since 2014 and former treasury official during the Obama reign came first in the evaluation. Previously, she was the leading contender to be the Fed chair before President Biden renominated Jerome Powell, and Brainard was instead installed as the central bank’s No. 2 official, the vice chair. 

Brainard is set to replace outgoing NEC Director Brian Deese as the central bank is considering when to pause the ongoing campaign to lower the inflation rates and the rate hike in the country. The White House, Fed spokesperson, and Brainard have declined to comment on the sincerity of the news.

Brainard is one of the Fed’s most dovish officials, mainly indicated through her response to major debates. As the central bank debated raising the interest rates to fight inflation, Brainard pointed out that the central bank can lower inflation rates without increasing the unemployment rates.

How Brainard treats crypto

Based on her previous comment on the industry, news of Brainard’s appointment has attracted comments from role players in the crypto industry as they wait to see what happens next. Her input in the crypto industry might be a source of alarm based on her remarks at the Bank of England conference in London.

The incoming Joe Biden’s top economic adviser said that the crypto industry needs regulations to keep the sector from becoming a threat to the financial system. In her speech, she noted that although innovations make financial services faster, cheaper, and more inclusive, sound regulations are essential before the innovations grow and cause instability in the broader financial system. 

Brainard highlighted cryptocurrency’s volatile nature, calling on the government to instill foundations to regulate the industry. She pointed out recent events that have rocked the cryptocurrency industry, such as the creation attempts of decentralized stablecoins, the collapse of Terra, and the falling into liquidation of the cryptocurrency hedge fund, Three Arrows Capital. 

The Fed official said that innovations and financial technologies could not independently convert risk assets into safe ones. However, she was delighted to point out that the crypto industry has not yet cast its roots wide enough to destabilize the traditional financial system. Therefore, constraints would still work to regulate the interconnection between cryptocurrency and the conventional financial system. 

Brainard’s main concern with the crypto industry is that someone must bear the risk evaluation cost, maintain resources to cushion the risks, comply with the law to avoid terrorism and crime, and serve all consumers fairly. She pointed out that in the DeFi and crypto industry, there is no one bearing these responsibilities. Hence, no one can determine the success and efficiency of this industry on regulatory noncompliance or genuine innovation.