US Treasury Secretary Janet Yellen, Sam Bankman-Fried’s FTX cryptocurrency He said the collapse of his empire reinforces his view that the digital assets market requires “very careful regulation.”
US Treasury Secretary Yellen: “FTX Crash Reveals Weaknesses in Cryptocurrency Industry”
“All these events point to the industry’s weaknesses,” Yellen told Bloomberg News on Saturday.
The filing for bankruptcy represents a dramatic collapse for a company that said last year it had over 5 million users worldwide and traded more than $700 billion in crypto that year alone. Bankman-Fried’s $16 billion fortune was wiped out in one of history’s greatest fortunes.
Speaking on her way to the Group of 20 leaders’ summit held in Bali, Indonesia, Yellen compared this to developed financial markets, where rules can better protect investors.
Yellen said:
“On other regulated exchanges, you keep client assets separate. The idea that you could use the deposits of an exchange’s customers and lend them to a separate business that you control to make leveraged, risky investments would not be permissible.”
While Yellen complained about losses for individual investors, she said the FTX debacle could have been worse if cryptocurrencies were more integrated into the financial system.
“At least it’s not deeply integrated with our banking industry and doesn’t pose broader threats to financial stability at this point,” he said.
Yellen also said in response to another question that regulatory tools criticized by major banks are not the only factor limiting liquidity in the $24 trillion Treasury securities market.
*Not investment advice.
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