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Key House lawmaker calls collapse ‘a dumpster fire’

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Rep. Patrick McHenry, Republican of North Carolina and influential member of the House Financial Services Committee, speaks at a hearing in Washington, DC.

Andrew Haller | Bloomberg | Bloomberg | Getty Images

A lawmaker called the collapse of cryptocurrency exchange FTX a “garbage fire” and called on US banking regulators on Wednesday to step up scrutiny of the industry.

Rep. Patrick McHenry, the top Republican on the House Financial Services Committee, said that the top Republican on the House Financial Services Committee, Rep. Patrick McHenry, is the top Republican on the U.S. financial system.

McHenry, who is likely to become the next chairman of the committee if Republicans take control of the House, as expected, said early Wednesday that current chairman Maxine Waters, D-California Along with the state, announced a bipartisan hearing on the FTX collapse.

FTX made the application last week after a failed deal to boost liquidity. Chapter 11 Bankruptcy Protection On Friday, 130 affiliates, including Bankman-Fried’s cryptocurrency trading firm Alameda Research and its U.S. subsidiary FTX.us, participated. Bankman-Fried has since stepped down as CEO of the company he founded. Cascading chain of events the entire industry.

A spokesman for Senate Banking Committee chairman Sherrod Brown of the Ohio Democratic Party said the panel also plans to hold its own hearings.

Additionally, the Securities and Exchange Commission, the Department of Justice, and the Commodity Futures Trading Commission have launched their own investigations into FTX’s bankruptcy and Bankman-Fried’s “misconduct.”

Treasury Secretary Janet Yellen also called for “more effective oversight of the cryptocurrency market” in a statement released Wednesday. She said the FTX failure would have limited impact on the broader financial system. However, a recent report by the Financial Stability Oversight Council, chaired by the Treasury Department, said that further intermingling of the traditional financial system and the cryptocurrency market “could raise broader financial stability concerns.” There is a warning.

Cryptocurrency lender BlockFi Inc. is reportedly considering bankruptcy, telling investors there is a “significant risk” of FTX’s failure.And early Wednesday, cryptocurrency lender Genesis Global Trading told clients in a series of tweets It said it was suspending new loans and customer redemptions as it looked for new sources of liquidity. “We hired the best advisors in the industry and considered every possible option,” the company said.

“Given the failure of FTX, it is more important than ever for Congress to update our legislation. and the time to protect the digital access ecosystem from risk.”

Barr said few banks are involved in or trade in crypto assets, but the Federal Reserve will soon issue “guidance and clarity” to financial institutions engaged in crypto-related activities. rice field. “So far, very few banks have been involved in this activity, so we want to make sure that these rules are in place while the level of activity is relatively contained,” Barr said. says.

He said he welcomed the new law requiring additional regulation and oversight of financial institutions that offer stablecoins, a type of cryptocurrency that is tied to a currency with a fixed value such as the US dollar. .

“Private capital can pose significant risks to financial stability, unless properly regulated,” he said.

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