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Tuesday, February 7, 2023

FTX Contagion Seems To Be Spreading As Calls For Regulation Get Louder

It is believed that several politicians and crypto executives have started getting louder with their calls for the regulation of crypto industry.

This seems to be the aftermath of the collapse of FTX as it has been making several waves throughout the sphere. In the last 24 hours, the President of the European Central Bank, Christine Lagarde called for the supervision and regulation of crypto industry as an absolute necessity for the EU, while the Committee Chair for the United States House Financial Services, Maxine Waters, went on to announce that the legislators would be exploring the collapse of this crypto company in a 13th December inquiry.

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On the 28th of November, a crypto supporter- Cynthia Lummis- who is also a Senator in the United States, described this collapse as a wake-up call for Congress- according to a report from the Financial Times. 

The Collapse of FTX Has Ramifications For The Entire Crypto Industry

In an interview at the Crypto and Digital Assets Summit held by Financial Times, Lummis stated that the bipartisan bill that she had introduced in the early part of the year would have definitely prevented the collapse of FTX- with regulators gaining the ability to check if a certain exchange would be falling below the threshold immediately. She went on to explain that those were the things that had been in place for this exchange, which could have possibly set off alarm bells. Interestingly, this could have also led to the creation of regulatory enforcement actions, and reviews by several federal regulatory agencies. 

Just the previous week, JP Morgan- a famous banking and financial service provider, mentioned in a 24th November note that it would be expecting more urgency in the current crypto framework that is in place since the collapse of FTX. According to the firm, it was quite possible that the regulations would be imported from the traditional system of finance. 

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