Joe Biden Leads ‘Critical’ Call for Game-Changing Global Bitcoin and Crypto Rules After Shock FTX Collapse
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Calls for tighter regulatory controls have grown into a cacophony over the past week as the amount of money believed to have been lost by FTX and its sister company Alameda Research reaches alarming levels and threatens to engulf the wider crypto market.
Now, after the latest gathering of the Group of 20 (G20) industrialized countries in Indonesia, the leaders of the participating countries called the need for international rules to govern the fast-growing bitcoin and crypto space “critical” and said potential risks to “financial stability” had to be subdued.
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US President Joe Biden has previously called for government agencies to cooperate on crypto … [+]
“It is critical to build public awareness of risks, to strengthen regulatory outcomes and to support a level playing field, while harnessing the benefits of innovation,” the G20 leaders, including US President Joe Biden, wrote in a statement to the White House. website after the meeting this week in Bali, Indonesia.
Last month, global financial standard setter the Financial Stability Board (FSB) proposed rules that would subject crypto companies and markets to the same tough rules that govern traditional finance.
“We welcome the FSB’s proposed approach to establish a comprehensive international framework for the regulation of crypto-asset activities based on the principle of ‘same activity, same risk, same regulation,'” the G20 leaders said, adding that they want to “ensure that the crypto-asset ecosystem , including so-called [traditional currency-pegged] stablecoins, are closely monitored and subject to robust regulation, supervision and oversight to mitigate potential risks to financial stability.”
The Bahamas-based FTX exchange reportedly lent client deposits to Alameda Research, a trading firm also owned by former billionaire founder Sam Bankman-Fried (SBF), possibly losing as much as $8 billion.
The gaping hole in FTX’s balance sheet has sparked a wave of warnings from other crypto companies with FTX exposure and sent them scrambling to distance themselves from the bankrupt exchange.
US Treasury Secretary Janet Yellen said FTX’s fall “demonstrates[s] the need for more effective oversight of cryptocurrency markets,” in a statement this week, adding that the same protections offered in traditional markets should apply to crypto assets.
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The Bitcoin price has crashed by more than 70% since this time last year, plunging the crypto … [+]
“This is a wake-up call, rather than just a bump in the road, or even the end of the road,” Cristiano Bellavitis, a professor at Syracuse University who specializes in cryptocurrency and blockchain technology, said in emails. “The sector is huge financially, but has very limited regulation. The same problems would not have arisen in the ordinary financial system.”
However, Bellavitis expects the bitcoin and crypto industry to eventually recover from the FTX meltdown, predicting that regulation will help the technology flourish.
“[The collapse of FTX] will reduce confidence in the crypto industry, but this industry and blockchain technology are here to stay,” Bellavitis said. “More regulation and clearer rules will only strengthen what this industry can do.”
