Yellen: “Very Careful Regulation” Is Needed for Crypto.
In an interview with Bloomberg on Saturday, U.S. Treasury Secretary Janet Yellen expressed her worries over the collapse of the cryptocurrency exchange FTX. The loss of FTX, she said, has strengthened her belief that the cryptocurrency business needs “extremely strict supervision,” adding that “It highlights the flaws of this whole sector.”
Yellen likened the cryptocurrency markets to established financial markets with stricter laws for investor safety, adding:
Customers’ funds would be segregated on other regulated exchanges. The idea that you might utilize the deposits of exchange customers and lend them to a different business under your control to make leveraged, hazardous transactions would not be permitted.
She said, “At least it’s not strongly interwoven with our banking sector and, at this moment, doesn’t pose larger dangers to financial stability,” stating that the FTX fiasco may have been worse had digital assets been more firmly ingrained in the financial system.
Vice-Chair of the Fed: Cryptocurrency Needs “Strong Regulatory Guardrails”
In a Monday interview with Bloomberg, Federal Reserve Vice Chair Lael Brainard emphasized the importance of strict cryptocurrency regulation.
She pointed out that the cryptocurrency industry has shown itself to be vulnerable to the same dangers as conventional finance and should be governed by the same laws. Brainard reiterated her steadfast belief that crypto money need strict regulation, saying:
The fact that small-scale investors are suffering significant losses is quite worrying.
The deputy chairman of the Federal Reserve said, “Despite much hoopla, you heard a lot about how decentralized these markets are… You are just seeing a domino effect, with failures on one platform spreading to others, as they find out to be highly concentrated and linked. She declared:
It serves as another evidence, in my opinion, that crypto finance must fall under the purview of regulation since the dangers it presents are identical to those of conventional finance. Strong regulatory barriers are required.
A increasing number of politicians are pressing for stronger cryptocurrency regulation in the wake of FTX’s bankruptcy filing. The crypto industry is “substantially non-compliant,” according to Gary Gensler, head of the U.S. Securities and Exchange Commission (SEC). The White House and a number of US lawmakers also demanded adequate crypto monitoring last week.
