Fact Sheet: Crypto Carnage Shows Dangers of Unproven Technological Advancements in Finance and Need for Banking Regulators to Act

WASHINGTON, D.C.— Phillip Basil, Director of Banking Policy, issued the following statement in connection with the release of Better Markets’ Fact Sheet on FinTech, Crypto, the Banking Industry and Regulation.

“The recent rapid and spectacular collapse of the crypto company FTX has clearly shown – again – the fiction and lawlessness of the crypto industry. Fortunately, this crypto carnage has largely been kept out of the traditional banking and financial system due mostly to the financial regulatory agencies.  This is an example of the increasing bank-like activities of crypto and FinTech companies and the important role the banking regulatory agencies have in addressing the many novel risks they bring that threaten the system from the inside and out.

“There are some financial technologies designed to safely integrate into our financial system, while providing important consumer protections. This type of innovation should continue with the risks being appropriately addressed and managed consistent with the law. But there are also many current technologies that disregard or are designed to circumvent regulations and consumer protections. These technologies are a threat to financial stability, undermine consumer protections, and must be kept out of the traditional financial system.

“The banking regulatory agencies have a duty to address the complicated, interrelated challenges of these technologies with an analytic framework that strikes the…

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