Yellen Says FTX Collapse Shows Weaknesses of Entire Crypto Sector — Fed"s Brainard Pushes for Strong Regulation
U.S. Treasury Secretary Janet Yellen and Federal Reserve Vice Chair Lael Brainard have stressed the need for strong crypto regulation. Yellen saidthe FTX collapse shows “the weaknesses” of the entire crypto sector while Brainard cautioned that failures from one platform are “spilling over into elsewhere.” Yellen: Crypto Needs ‘Very Careful Regulation’
U.S. Treasury Secretary Janet Yellen shared her concerns regarding the implosion of cryptocurrency exchange FTX Saturday in an interview with Bloomberg. She stressed that FTX’s failure has reinforced her view that the crypto market requires “very careful regulation,” emphasizing that “It shows the weaknesses of this entire sector.”
Yellen compared crypto markets to developed financial markets with better investor protection rules, adding: In other regulated exchanges, you would have segregation of customer assets. The notion you could use the deposits of customers of an exchange and lend them to a separate enterprise that you control to do leveraged, risky investments — that wouldn’t be something that’s allowed.
“At least it’s not deeply integrated with our banking sector and, at this point, doesn’t pose broader threats to financial stability,” she continued, warning that the FTX debacle could have been worse if digital assets were more embedded in the financial system. Fed’s Vice Chair: Crypto Needs ‘Strong Regulatory Guardrails’
Federal Reserve Vice Chair Lael Brainard similarly stressed the importance of strong crypto regulation in an interview with Bloomberg Monday.
She noted that the crypto sector has proven to be susceptible to the same risks as traditional finance and should be subject to the same rules. Reiterating her long-held view that crypto finance needs strong regulation, Brainard opined: It’s really concerning to see that retail investors are really getting hurt by these losses.
The Federal Reserve vice chair added: “Despite a lot of hype … you heard a lot about how decentralized these markets are … it turns out they are highly concentrated, highly interconnected, you are just seeing a domino effect, failures from one platform spilling over into elsewhere.” She concluded: It reinforces I think this need to make sure that crypto finance, because it is no different than traditional finance in the risks that it exposes, needs to be under the regulatory perimeter … There need to be strong regulatory guardrails.
Following the bankruptcy filing of FTX, a growing number of lawmakers are calling for stricter crypto regulation. The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has warned that the crypto field is “significantly non-compliant.” Last week, the White House and several U.S. senators also called for proper crypto oversight. Tags in this story Crypto regulation, Cryptocurrency regulation, Fed, Federal Reserve, Janet Yellen, Treasury Secretary
What do you think about the comments by Treasury Secretary Janet Yellen and Federal Reserve Vice Chair Lael Brainard? Let us know in the comments section below. Kevin Helms
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. Manhattan District Attorney Freezes $1.3 Million in Crypto — Seeks to Return Funds to Fraud Victims REGULATION | 2 days ago Conflicting Reports Emerge About SEC Helping Bankrupt Crypto Exchange FTX With Legal Loopholes REGULATION | 2 days ago
Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleSBF Is Sleeping Better, Playing Video Games — New York Times Sam Bankman-Fried Interview Dunked on for Going Soft on FTX Co-Founder Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItRipple CEO: SEC Lawsuit Over XRP "Has Gone Exceedingly Well"
The CEO of Ripple Labs says that the lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against him and his company over XRP "has gone exceedingly well." He stressed: "This case is important, not just for Ripple, it’s ... read more.Privacy-Centric Monero Plans for July Hard Fork, Plans Include Ring Signature, Bulletproof Upgrade Fed"s Bullard Wants to Raise Bank Rate to 3.5% by Year"s End, Hints at 75 Basis Point Rate Hike FBI Issues Alert Concerning Malicious State-Sponsored North Korean Hackers Targeting Crypto Firms Iran to Increase Penalties for Unauthorized Cryptocurrency Mining