US Treasury Secretary Janet Yellen called for urgent regulation yesterday as she spoke about last week’s collapse of the industry’s second-largest cryptocurrency exchange, FTX. Yellen said that the bankruptcy of one of the largest cryptocurrency exchanges in the industry and the extremely negative impact of individual and institutional investors once again revealed the need for more effective cryptocurrency regulations. The Treasury Department, along with other regulators, grouped risks in crypto markets under the headings of use of client assets, lack of transparency and conflict of interest last year.
Yellen went on to say that she has laws that are extremely strong and provide investor protection for traditional assets, and that similar laws should apply to crypto assets and services. FTX, which reached a valuation of $32 billion last year, was exposed to rapid fund withdrawals from its corporate and individual customers after Alameda’s balance sheet figures were leaked and a deficit was seen in the financial statements. FTX, which could not meet the fund withdrawal demands, thus had to declare bankruptcy in less than a week.
This negative situation has once again revealed how serious the lack of regulation in the crypto industry has caused. After the Terra collapse this year, country authorities have started to prioritize crypto regulations, but no concrete steps have been taken yet. Janet Yellen, in their review, said that the effects of the FTX collapse are likely to be limited to the crypto industry, but said they did not rule out the danger that businesses linked to traditional finance companies could cause financial instability.