Federal Reserve Governor Christopher Waller on Friday had a pair of warnings for those involved in cryptocurrency assets, telling buyers they could lose their investments, and banks that they must guard against bad actors and risks to the financial system.

In recent months the cryptocurrency industry has been roiled by massive losses for investors, bankruptcies of crypto exchanges, lenders and payment platforms, and high-profile court cases including a criminal case against FTX founder Sam Bankman-Fried. U.S. regulators including the U.S. central bank have told banks they need to be more careful about fraud risk.

In remarks prepared for delivery to a Global Interdependence Center conference, Waller said so far the spillover to the broader financial system has been "minimal," and it is critical that regulators make sure to mitigate financial stability risks associated with stress in the crypto industry.

At the same time, he said, banks considering engagement in cryptocurrency must meet "know your customer" and anti-money laundering requirements, and must ensure they monitor customers' business models and risk-management systems so that the bank is "not left holding the bag" if there is a crypto meltdown

Waller had an even starker warning for traders of cryptocurrency: as assets that have no intrinsic value, cryptocurrencies are risky.

"If people want to hold such an asset, then go for it," Waller said. "However, if you buy crypto assets and the price goes to zero at some point, please don't be surprised and don't expect taxpayers to socialize your losses."