After FTX Meltdown Yellen Calls For More Effective Oversight Of Cryptocurrency Markets
US Treasury Secretary Janet Yellen has called for more effective oversight of cryptocurrency markets.
Yellen made the call in the wake of cryptocurrency exchange FTX’s collapse last week.
Without directly referring to FTX, Yellen said in a statement, “The recent failure of a major cryptocurrency exchange and the unfortunate impact that has resulted for holders and investors of crypto assets demonstrate the need for more effective oversight of cryptocurrency markets”.
Customer assets worth $10 billion were reportedly transferred from the crypto exchange to FTX founder Sam Bankman-Fried’s trading company Alameda Research last week.
FTX, which filed for bankruptcy, is facing scrutiny from U.S. authorities.
Over the past year, through the President’s Working Group on Financial Markets and in response to President Joe Biden’s Executive Order on Digital Assets, the Treasury Department worked with its regulatory partners to identify risks in crypto markets. Some of the risks identified in these reports, including comingling of customer assets, lack of transparency, and conflicts of interest, were at the center of the crypto market stresses observed over the past week.
Yellen noted that the United States has very strong investor and consumer protection laws for most of its financial products and markets that are designed to address these risks. In her opinion, where existing regulations apply, they must be enforced rigorously so that the same protections and principles apply to crypto assets and services.
She stressed the need for the federal government and Congress to move quickly to fill the regulatory gaps the Biden Administration has identified.
In terms of financial stability, spillovers from the events in crypto markets have been limited, Yellen said, without directly naming FTX.
However, she noted that a recent report by the Financial Stability Oversight Council warned that further interconnections of the traditional financial system and crypto markets could raise broader financial stability concerns. “Going forward, it’s vital we do what is necessary to address these concerning risks and act to protect consumers and promote financial stability,” Yellen said.
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