Like the collapse of the exchange FTP extension continues to fuel bearish sentiment across the cryptosphere, US Treasury Secretary Janet Yellen called for stricter regulation for the cryptocurrency industry.
“The recent bankruptcy of a major cryptocurrency exchange and its unfortunate impact on cryptocurrency holders and investors demonstrates the need for more effective oversight of these markets,” the official said in a press release.
Ms. Yellen said her agency and other US regulators have identified a number of risks within the cryptocurrency markets over the past year, and these remarks have been reflected in reports released under the auspices of the US president’s task force on markets. financial.
“Some of the risks we identified in these reports, including the mingling of client assets, lack of transparency and conflicts of interest, were key to the tensions in cryptocurrency markets seen last week,” Ms. Yellen, who was was director of Federal reserve (FED), the country’s central bank, from 2014 to 2018.
“We have very strong investor and consumer protection laws for most of our financial products and markets, which are designed to address these risks,” the secretary of state added. “Enforcement of existing regulations must be done rigorously so that the same protections and principles are extended to cryptographic assets and services.”
The official concludes that the government, including Congress, needs to “move quickly to fill regulatory gaps” even if, “in terms of financial stability, the fallout from the events that have unfolded in the cryptocurrency markets has been limited.”
Following the FTX crash, some market observers are concerned about the risk of a potential contagion that could spread through the cryptocurrency ecosystem. However, this slowdown could benefit some major players and lead to further market consolidation, according to Joseph Ayubanalyst at the international player in the financial sector City.
“I think it’s a double-edged sword,” Ayoub said in a recent interview. “On the one hand there are the issues of declining volumes and interest and increasing volatility, which is clearly a negative for many companies operating in the cryptocurrency space.”
At the same time, the current market setbacks “also present an opportunity for other players to potentially take a larger share of the market (…)” the analyst said.
“It is difficult to know what the scale and depth of this disaster will be. But the contagion can last for a significant period of time,” he concluded.
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