US Treasury Secretary: Crypto markets need better oversight

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Crypto markets need more effective oversight, US Treasury Secretary Janet Yellen said on Wednesday, days after cryptocurrency exchange FTX filed for bankruptcy in the US.

"The recent failure of a major cryptocurrency exchange and the unfortunate impact that has resulted for holders and investors of crypto assets demonstrate the need for more effective oversight of cryptocurrency markets," Yellen said in a statement, without directly naming FTX.

Over the past year, treasury and other regulators had identified risks in crypto markets including "comingling of customer assets, lack of transparency, and conflicts of interest," which were "at the center of the crypto market stresses observed over the past week," Yellen said.

Read: NFT sales hit 12-month low after cryptocurrency crash

Consumer protections should be enforced in crypto markets rigorously, and the federal government and Congress should act quickly to fill any regulatory gaps, Yellen added.

Even if the damage has mainly been contained within crypto markets, its links to the traditional financial system "could raise broader financial stability concerns," she warned.

The US Treasury Secretary's remarks largely echo concerns conveyed by banking regulators at two days of congressional hearings, at which they said spillovers have been limited by the FTX collapse and other upheavals in the crypto markets this year.

A few days ago, cryptocurrency exchange FTX has filed for bankruptcy, seeking court protection as it seeks a way to return money to users. 

The company's CEO, Sam Bankman-Fried, resigned as the chief executive, according to the company. Bankman-Fried, before the company's downfall, was in charge of the world's second-largest crypto exchange.

In a week, the FTX empire collapsed, shaking confidence in the crypto market.