Treasury Secretary Janet Yellen – who despite being a renowned economist couldn’t predict that the U.S. was headed for its worst inflationary period in over 40 years – has stated that the fall of the FTX exchange is exactly why the country needs to focus on crypto regulation.
Janet Yellen Discusses Crypto Regulation
In a recent interview, Yellen mentioned:
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. We have very strong investor and consumer protection laws for most of our financial products and markets that are designed to address these risks. Where existing regulations apply, they must be enforced rigorously so that the same protections and principles apply to crypto assets and services.
Yellen is not the only one using the situation to push the call for crypto regulation. Not long ago, Maxine Waters – a democrat from California and head of the House Financial Services Committee – vowed that her team would examine what happened with FTX and that they would see about implementing appropriate crypto regulation relatively soon so that situations like these couldn’t happen again.
In a statement, Waters mentioned:
The fall of FTX has posed tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds. Unfortunately, this event is just one out of many examples of cryptocurrency platforms that have collapsed just this past year.
Yellen further stated:
Going forward, it’s vital we do what is necessary to address these concerning risks and act to protect consumers and promote financial stability.
FTX will likely go down in crypto history as one of the biggest blunders to ever occur. Long considered a top player in the digital asset space, the exchange ran into serious trouble in mid-November when it was allegedly experiencing a liquidity crunch, meaning it was lacking funds and required additional help.
Binance Said “No Way!”
The company turned to its larger rival Binance and spoke of a potential merger, and while it appeared things were moving in this direction for a few days, Binance eventually backed away and said that the problems FTX was facing were simply too big for it to handle. From there, FTX was forced to undergo bankruptcy proceedings and its founder Sam Bankman-Fried resigned from his post.
The idea of regulation has long been a hotly debated topic, with some claiming that it will make the crypto space more legitimate and mainstream, and others saying that regulation goes against everything digital currency stands for and subjects it to the same bad habits seen in traditional finance.