Randal Quarles, the vice chair of the Federal Reserve, said cryptocurrencies like Bitcoin could pose financial risks.

"While these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide-scale usage," Quarles said in a speech today entitled 'Thoughts on Prudent Innovation in the Payment System,' delivered at the 2017 Financial Stability and Fintech Conference.

"Without the backing of a central bank asset and institutional support, it is not clear how a private digital currency at the center of a large-scale payment system would behave, or whether the payment system would be able to function, in times of stress," he added.

On Wednesday, Bitcoin fell as much as 18%, according to CoinDesk. And, analysts at Fundstrat Global Advisors have warned investors that Bitcoin is susceptible to wild swings of as high as 30% to 40%.

Quarles also noted that digital currencies like Bitcoin, which has skyrocketed over 900% year-to-date, continue to pose other serious risks.

"The potential deployment of unproven technology, money laundering, cybersecurity, and privacy to name a few," Quarles said. "I am particularly concerned that a central-bank-issued digital currency that's held widely around the globe could be the subject of serious cyberattacks and could be widely used in money laundering and terrorist financing."

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