FTX's collapse shows regulation is needed 'before the next crypto catastrophe takes down our economy,' Elizabeth Warren warns

The implosion of FTX shows that there is a need for proper regulation of digital assets.

The Massachusetts senator said Tuesday that financial watchdogs need to intervene in the space to protect retail investors after the collapse of Sam Bankman-Fried's exchange.

She wrote that the implosion should be a wake-up call. Regulators need to enforce the law before more people are cheated, and Congress needs to plug the remaining holes in the regulatory structure.

FTX filed for Chapter 11 last week after rival exchange Binance marked down its holdings of the group's FTT token.

FTX's new CEO John Ray III said in a Chapter 11 filing that the group's total holdings had been worth just $659,000, rather than the $5.5 billion claimed by Bankman- Fried.

Warren compared last week's events to the 2008 financial crisis, saying that it was similar to the path of financial innovations that began with dazzling rewards and ended with ruin.

Warren wants to make sure that retail investors are protected. Terrorists, drug dealers and Ransomware criminals can hide their illegal activities by trading billions of dollars of Cryptocurrencies with complete anonymity.

She would like to see a reduction in the pollution levels of the industry. Congress should step in if the Energy Department doesn't want to use the disclosures.