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Sen. Sherrod Brown calls on Treasury Secretary Janet Yellen to assist rein in cryptocurrency companies after FTX collapse

Bahamas-based crypto trade FTX filed for chapter within the U.S. on Nov. 11, 2022, searching for court docket safety because it appears for a strategy to return cash to customers.

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Senate Banking Committee Chairman Sherrod Brown urged Treasury Secretary Janet Yellen on Wednesday to work with lawmakers and monetary regulators to assist write laws to rein within the cryptocurrency market within the wake of the collapse of crypto trade FTX.

In a letter to the Treasury chief, Brown, D-Ohio, advised Yellen to include suggestions from the Monetary Stability Oversight Committee, together with laws that might “create authorities for regulators to have visibility into, and in any other case supervise, the actions of the associates and subsidiaries of crypto asset entities,” with monetary regulators, such because the Securities and Trade Fee and the Federal Reserve Board.

An Oct. three FSOC report famous gaps within the regulation of crypto asset actions.

Brown despatched the letter the day earlier than Congress holds its first listening to on FTX’s collapse. The Senate Agriculture Committee has known as Commodity Futures Buying and selling Fee Chairman Rostin Behnam to testify Thursday on the agency’s dramatic and swift failure. Brown intends to carry his personal listening to on FTX and its founder, Sam Bankman-Fried, in December, a spokesperson beforehand advised CNBC.

“As we proceed to be taught extra particulars, the failure of this crypto trade brings to thoughts the litany of monetary agency failures because of the mixture of reckless threat taking and misconduct,” Brown wrote to Yellen. “It’s essential that dangers on this space are contained and don’t spillover into conventional monetary markets and establishments, and we draw the proper classes concerning buyer and investor safety.”

When requested for remark, the Treasury Division referred CNBC to feedback Yellen made at The New York Occasions’ DealBook Summit on Wednesday.

“To the extent that the crypto world might ship sooner, cheaper, safer transactions, we needs to be open to monetary innovation,” Yellen mentioned. “That mentioned, that is not what most of it has been about. And I strongly believed and proceed to imagine and I believe all the pieces we have lived by over the past couple of weeks, however earlier as effectively, says that is an trade that actually must have sufficient regulation. And it would not.”

FTX filed for chapter and its CEO, Bankman-Fried, stepped down earlier this month. The crypto big was valued at $32 billion.

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In his letter, Brown warned that “FTX’s connections to different dangerous crypto companies seemingly deepened its losses and proceed to ship shock waves to different entities” and that the corporate “did not train fundamental company controls or threat administration over its operations.”

Shut on FTX’s heels, crypto agency BlockFi filed for chapter on Monday. The corporate listed an excellent $275 million mortgage to FTX US within the submitting.

Every firm’s failure endangered greater than 200,000 collectors.

Brown inspired partnership between Congress, Treasury and the White Home, even referencing the Treasury’s coordination with the President’s Working Group on Monetary Markets. The group really useful laws to control stablecoins, a model of cryptocurrency, in a Nov. 1 report.

“Congress and the monetary regulators should work to get all of this proper. As extra crypto failures happen, the age-old adage is extra true than ever — if it appears too good to be true, it most likely is,” Brown wrote.

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