Federal Reserve Chair Jerome Powell called for better regulation of cryptocurrencies and said that although the industry's recent shakeout failed to cause broader financial turmoil, that may not be the case in the future.

Global increases in interest rates exposed "significant structural issues in the DeFi [decentralized finance] ecosystem," Powell said Tuesday during a panel discussion on digital finance hosted by the Banque de France. "The good news, I suppose, is that the interaction—from a financial stability standpoint—the interaction between the DeFi ecosystem and the traditional banking system and traditional financial system is not that large at this point.

"That situation will not persist indefinitely," he said via video. "There's a real need for more appropriate regulation, so that as DeFi expands and starts to touch more retail customers and that sort of thing, so that appropriate regulation is in place."