The collapse of FTX strengthened Janet Yellen's view that the market requires careful regulation, according to a report.
In an interview on her way to the G20 meeting in Indonesia, she said that the weakness of the entire sector was shown.
She made the comments shortly after FTX filed for Chapter 11 bankruptcy on Friday, capping a couple of weeks of turmoil, which began after a November 2 coinDesk report and a public feud with the CEO of Binance.
Sources told the news agency that Bankman-Fried transferred $4 billion from FTX to Alameda Research in early 2022.
In other regulated exchanges, customer assets would be separated, according to Yellen. It wouldn't be allowed to use the deposits of customers of an exchange to lend them to a separate enterprise that you control to do risky investments.
At least it's not deeply integrated with our banking sector and it doesn't pose broader threats to financial stability.
Other experts are predicting tighter rules for cryptocurrencies following FTX's downfall.
"What's going on in the last few days is going to scare people and is going to cause regulators to take action," Larry Summers, the former Treasury Secretary, said during a conversation hosted by The Information.
El-Erian told CNBC that the downfall of FTX would keep regulators up at night. El-Erian said that this type of thing shouldn't happen.
Gary Gensler, the chair of the Securities and Exchange Commission, told CNBC on Thursday that there needs to be better protection for investors in the digital currency space.
Since most trading activity is outside the US, it makes no sense to crack down on US firms. The FTX is located in the Bahamas.
The problem is that the SEC failed to create regulatory clarity in the US so many American investors went offshore. He was responding to a call for more aggressive regulation.
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