Senators Warren and Smith are demanding answers from financial regulators about banks’ involvement in the cryptocurrency sector, following the collapse of crypto exchange FTX and other high-profile failures.
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LONDON (Bywire News) – U.S. Senators Elizabeth Warren and Tina Smith are demanding answers from the Federal Reserve and other financial regulators about banks’ involvement in the cryptocurrency industry. In letters sent to the heads of the Fed, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, the senators expressed concern about the risks to banks and the banking system associated with cryptocurrency trading and loans to crypto firms. They have given regulators two weeks to respond to their requests and provide details on their oversight of the industry.
The senators’ demands come in the wake of the implosion of crypto exchange FTX, which filed for bankruptcy last month after losing at least $1 billion in customer funds. Warren and Smith argue that the collapse of FTX shows that the cryptocurrency industry may be more closely tied to the traditional banking system than regulators realize. They are calling for a review of the relationships between banks and crypto firms to ensure that the risks to the financial system are properly assessed and managed.
Lawmakers are increasing their scrutiny of the cryptocurrency industry following the collapse of FTX and other high-profile failures in the sector. While the U.S. banking system has so far been largely unaffected by the crypto crash, regulators are under pressure to ensure that the risks posed by the industry are properly managed and contained.
(Writing by Natalia Siler, editing by Michael O’Sullivan)
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