Better protect customers: After FTX bankruptcy: calls for crypto regulation grow louder | news

• FTX bankruptcy hits several crypto companies
• The G20 countries, the Bank of England and the US senator are in favor of more regulation
• Sam Bankman-Fried does not believe in regulators

In recent weeks, the crypto world has been dominated by the insolvency of crypto service FTX. The extent of the failure is still not fully predictable. Several other crypto companies have now revealed that they have also been affected by the stock market collapse. It is feared that the FTX bust could trigger more bankruptcies and further destabilize the crypto sector as a whole.

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G20 countries praise efforts for more crypto regulation

Against this background, numerous government representatives from various countries are calling for stronger regulation of the crypto sector. The topic of crypto was also addressed in the joint final statement of the G20 summit in Bali on November 15 and 16. Welcoming the ongoing efforts of the Financial Stability Board (FSB) and other international regulatory authorities, “that the crypto-asset ecosystem, including so-called stablecoins, be closely monitored and subject to strict regulation and monitoring to reduce potential risks to financial stability.” According to its own website, the FSB is “an international body that monitors and makes recommendations on the global financial system.” The FSB follows the “same activity, same risk, same regulation” approach to regulating cryptoassets. On that basis, crypto-assets must be regulated in the same way as comparable traditional assets.

Bank of England aims to de-risk the crypto sector

The Bank of England also called for more regulation in the crypto sector after the FTX bankruptcy. Speaking at the Gilmore Centre, part of Warwick Business School, Vice President Jon Cunliffe said this year has shown that the crypto ecosystem is not stable, in large part due to extreme volatility. However, what also contributes to the instability is the lack of regulation: “But part of it is that the crypto institutions at the center of most of the system exist in a largely unregulated space and are very vulnerable to the risks that regulation in avoid the conventional financial sector.”

That’s why the UK financial regulator FCA warned FTX customers back in September that they were unlikely to get their money back “if things go wrong”. The bankruptcy of the crypto-financial services provider now shows that crypto-financial activities must be regulated to protect consumers, maintain financial stability and promote technological innovation.

Elizabeth Warren calls FTX collapse a ‘wake-up call’

Recently, US Senator Elizabeth Warren also commented on the FTX case in a piece for The Wall Street Journal eloquently titled “Regulate Crypto or It Will Shut Up The Economy.” She called the crypto service’s bankruptcy a “wake-up call” showing that regulators must enforce the law and Congress must close the existing loopholes in the regulatory structure before consumers are defrauded and the economy is hit by another crypto disaster. The Democrat also found harsh words against the US Securities and Exchange Commission. This has fallen far behind when it comes to crypto, even though the crypto sector has attracted millions of new investors. “Crypto thrives in the regulatory loopholes like subprime mortgages in 2008 and penny stocks a century earlier,” Warren opines, concluding his article by saying, “Many say crypto is a scam. Crypto proponents tout the technology’s world-changing potential, arguing that the naysayers just don’t get it.In any case, it’s high time that crypto be subject to the same rules of the game as other financial activities. […]”

Ex-FTX CEO Sam Bankman-Fried has had few flattering words for regulators

For her part, former FTX CEO Sam Bankman-Fried doesn’t have much good to say about regulation, according to a private Twitter exchange between Bankman-Fried and journalist Kelsey Piper in mid-November, which she published in a Vox article . In it, the crypto enthusiast complained that even regulators did not ensure that consumers were better protected. The exchange clearly says “Fuck the regulators” and further “They make everything worse. They don’t protect the customers at all”.

It remains to be seen to what extent the FTX debacle will actually lead to stricter regulation of cryptoassets.

Editor finanzen.net

Image Credits: T. Schneider / Shutterstock.com, Wit Olszewski / Shutterstock.com

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