FTX downfall triggers an avalanche for regulation initiatives

Customer assets, transparency and interests are at risk in the sector

Crypto markets need more oversight. At least that’s what the US Treasury Secretary Janet Yellen thinks, a few days after the collapse of crypto exchange FTX.

“The recent failure of a major crypto exchange and the unfortunate consequences it has had for holders and investors of cryptos demonstrate the need for more effective oversight of digital currency markets,” Yellen said in a statement. She didn’t mention FTX by name.

Regulators have been listing risks in the crypto markets over the past year, including “mixing of customer assets, lack of transparency and conflicts of interest.” According to Yellen, these dangers were well evident in the tensions in the crypto market recently.

Consumer protection must be rigorously enforced in crypto markets, Yellen said. She also sees a role for the US Federal Government and Congress to quickly come up with additional rules. While the damage has largely remained within the crypto markets, the ties to the traditional financial system may “raise broader concerns about financial stability,” she said.

Yellen’s comments largely align with concerns raised earlier by banking regulators in Congress. During a two-day interrogation, it was indicated that the consequences of the collapse of FTX and other turmoil in the crypto markets have been limited this year.

You might also like More from author

Comments are closed.