Small investors incurring losses might have far-reaching implications, but experienced investors know how to cope

Waller said that financial intermediaries may assist new crypto users manage risk, but cannot eradicate it, and that new, rapidly expanding financial products need public trust to exist.

The banking official presented historical examples to illustrate the connection between technological progress, regulation, and the accumulation of wealth.

Because of new technology and the absence of defined guidelines, some fortunes were created while others were ruined,

Waller proceeded by stating that experienced investors understand how to function in unregulated markets and may not want or desire regulation. He cited a recent Fed poll that revealed, despite the phenomenal growth of crypto-assets over the last few years, just 12% of American adults possess crypto, and 99.9% of them hold it for financial reasons.

Intermediaries in the financial industry may want regulation since new customers with unfavourable crypto experiences may engage them in disputes.

Waller elaborated:

When everyday investors start losing their life savings, for no reason except wanting to participate in a hot market, demands for collective action can mount quickly.[...] the question isn't about what experienced users of that ecosystem want — it's about what the rest of the public needs to have confidence in the ecosystem's safety, and for better or worse, you can't program confidence.

The central banker reasoned that these demands may lead to the socialising of individual losses, such as requests to repay small investors who lost money after the collapse of the Terra (LUNC; originally LUNA) ecosystem. That, in turn, increases the desire for control to avoid a recurrence of the scenario.