Investing.com – After the recent shock to the cryptocurrency market following the downfall of the FTX cryptocurrency exchange, thousands of investors in the United States and abroad have lost much of their money and investments.
The US Treasury’s remarks largely reflect concerns expressed by banking regulators in the two-day congressional hearings.
“The recent fiasco of a cryptocurrency exchange, and the unfortunate impact it has had on holders and investors of digital assets, demonstrates the need for more effective oversight of the markets,” the Treasury Department said in a statement, without naming FTX directly.
Treasury and other regulators have identified risks in the cryptocurrency markets over the past year, including “mixing of client assets, lack of transparency, and conflicts of interest,” which were “at the heart of the cryptocurrency market stresses observed over the past week.”
“The recent failure of a major cryptocurrency exchange and the unfortunate impact it has had on holders and investors of digital assets demonstrates the need for more effective oversight of cryptocurrency markets,” the US Treasury Secretary said in the statement.
Over the past year, through the President’s Working Group on Financial Markets and in response to the CEO’s order on digital assets, the Treasury Department has worked with its regulatory partners to identify risks in crypto markets.
Some of the risks we identified in these reports, including access to client assets, lack of transparency, and conflicts of interest, were at the heart of the cryptocurrency market stresses observed over the past week.
fill the gaps
“We have very strong investor and consumer protection laws for most of our financial products and markets that are designed to address these risks,” the statement added.
“When existing regulations are applied, they must be rigorously enforced so that the same protections and principles apply to crypto assets and services,” he emphasized.
“The federal government, including Congress, also needs to move quickly to close the regulatory gaps identified by the Biden administration,” he said.
In terms of financial stability, the spillover effects of events in the cryptocurrency markets were limited.
But a recent report from the Financial Stability Oversight Board, which is chaired by the Treasury Department, warned that more interdependence between the traditional financial system and cryptocurrency markets could raise broader financial stability concerns.
Going forward, it is imperative that we do what is necessary to address these related risks and act to protect consumers and promote financial stability.