The collapse of FTX has been wreaking havoc on the crypto industry for a week. The Secretary of State for the Treasury, Janet Yellen, then reiterated her concerns about the consequences that the problems of the crypto market could have on financial stability. This incident indeed showed the weakness of the entire crypto sector. She thus underlined the importance of strong regulation and more effective monitoring. However, such a solution requires a combined effort from all stakeholders and particularly from governments and regulators.
Yellen calls for more effective control of the crypto market
As speculation of FTX’s collapse continues, experts in the field are now sure of one thing. Surveillance of cryptocurrency markets has flaws. The failure of Bankman-Fried, which just filed for bankruptcy on Friday, exposed the problems in the entire sector. This is what led Washington leaders to call for action following the collapse of the great crypto exchange. Janet Yellen joined the cause, saying more effective oversight of crypto markets is needed.
According Decrypt, the Treasury Department issued reports in response to President Biden’s September executive order on cryptos. Yellen said they identified certain risks there such as the mixing of client assets, conflicts of interest and lack of transparency.
The government should act
Investor and consumer protection laws exist. They are designed to address risks, but unfortunately they are not enforced. Janet Yellen throws some of the blame on federal regulators. According to her, these organizations have not applied these existing laws to avoid the current disasters.
Janet Yellen therefore calls on the federal government to act quickly to close the regulatory gaps identified by the Biden administration. The lack of regulation will be all the more devastating. Indeed, the interconnections of the traditional financial system and crypto markets “could raise broader financial stability concerns. “.
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