According to the VP of the Fed | The fall of FTX shows the need for regulation of cryptocurrencies

(Washington) The fall of the cryptocurrency giant FTX shows that the sector must be subject to the same regulation as the traditional financial sector, because it carries the same risks, estimated Monday the vice president of the American central bank (Fed), Lael Brainard.

These markets “are very concentrated, very interconnected, and you see a domino effect. The failures of one platform or one company extend elsewhere,” the Fed’s number two said in a video interview with Bloomberg.

“It reinforces, I think, this need to ensure that crypto finance is included in the regulatory perimeter, because it is no different from traditional finance in the risks to which it exposes investors,” she said. pleaded.

“There must be strong regulatory safeguards,” she insisted.

The cryptocurrency market has been shaken since last week by the setbacks of FTX, which filed for bankruptcy protection on Friday. Its founder Sam Bankman-Fried, nicknamed “SBF”, 30, resigned the same day, replaced in the process by John Ray.

And on Saturday, company officials revealed that unauthorized transactions had taken place that could result in the disappearance of hundreds of millions of dollars.

It is “really worrying to see that retail investors are really affected by these losses”, worried M^me Brainard.

The Vice-President of the Federal Reserve had already, in July, estimated that the cryptocurrency sector presents the same risks as that of traditional finance, and must therefore be subject to the same rules.

On Monday, she again highlighted the “issues of interdependence, leverage, liquidity which are traditional financial risks, and consumer protection, retail protection”.

Following the declaration of bankruptcy of FTX, the police of the Bahamas, tax haven which shelters the headquarters of the platform, indicated Sunday to investigate to determine if facts of a criminal nature took place, in connection with the stock market and financial regulator of the ‘archipelago.

Just 10 days ago, FTX was still considered the second largest cryptocurrency platform in the world, valued at $32 billion at the start of the year.