Bloomberg reported on Saturday that U.S. Treasury Secretary Janet Yellen said the business needs “very careful regulation” in the wake of the FTX collapse.
The collapse of FTX shows the weaknesses of the entire sector, according to Federal Reserve Chairwoman Janet Yellen. The same exchange was attempting to rescue other struggling crypto firms from this year’s market crash just months ago.
Under an executive order from President Joe Biden, the U.S. government is already investigating the sector’s regulation.
In the months preceding the collapse, Bankman-Fried reportedly spent time in Washington, D.C., speaking with politicians and regulators before the midterm elections. However, Sens. Sherrod Brown and Elizabeth Warren demanded probes when the exchange became trapped in a liquidity bottleneck and rapidly collapsed.
Brad Sherman, a critic of cryptocurrencies, stated that he would cooperate with his colleagues in the House of Representatives to find alternatives for federal regulation.
Yellen noted that the impact of FTX’s collapse may have been harsher if cryptocurrencies were more interconnected with the traditional financial system.
Yellen told Bloomberg, “At least it’s not deeply integrated with our banking sector and, at this point, doesn’t pose broader threats to financial stability.”