US Treasury’s Yellen says crypto markets need better oversight

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US Treasury Secretary Janet Yellen said on Wednesday that crypto markets need more robust oversight, days after cryptocurrency exchange FTX collapsed.

“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.

Treasury and other regulators had identified risks in crypto markets over the past year including “co-mingling 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.

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

While the damage has mostly been contained within crypto markets, its links to the traditional financial system “could raise broader financial stability concerns,” she said.

Her remarks largely echo concerns voiced by banking regulators at two days of congressional hearings, at which they said spillovers have been limited from the FTX collapse and other upheavals in the crypto markets this year.