FTX Collapse Exposed 'Weaknesses' in Crypto, Janet Yellen Says: Report
In the aftermath of crypto exchange FTX's fall from grace, U.S. Treasury Secretary Janet Yellen said the industry needs "very careful regulation," Bloomberg reported Saturday.
“It shows the weaknesses of this entire sector,” Yellen said referring to the collapse of Sam Bankman-Fried's multibillion dollar enterprise – the same one that was, just months ago, looking to rescue other embattled crypto firms from the market crash earlier this year.
The U.S. government is already looking into regulating the industry under an executive order from President Joe Biden.
In the months leading up to the collapse, Bankman-Fried said he'd spent time conversing with lawmakers and regulators in Washington D.C. ahead of midterm elections. But after the exchange was locked in a liquidity crunch and quickly unraveled, Sen. Sherrod Brown and and Sen. Elizabeth Warren called for investigations.
Read more: Democrats Keep the US Senate but Crypto Only Has Eyes for FTX Collapse
Congressman and crypto skeptic Brad Sherman says he will work with his colleagues at the House of Representatives to "examine options for federal legislation."
The effects of FTX's collapse could have been worse if crypto was more connected to the traditional financial system, Yellen said.
“At least it’s not deeply integrated with our banking sector and, at this point, doesn’t pose broader threats to financial stability,” Yellen told Bloomberg.
Read more: SEC Commissioner Hester Peirce: FTX’s Collapse Could Finally Be ‘Catalyst’ for Regulation