The crypto currency market is rife with fraud, failures to comply with existing laws and big swings in volatility, but the recent implosion of digital currency exchange FTX hasn’t hampered the broader financial system, according to a report released Friday by Treasury’s Financial Stability Oversight Committee.
“FTX is a shock to that market,” a Treasury official said, adding that the bankruptcy underscores the committee’s concern about crypto highlighted in a report it released in October.
The committee, which was created after the financial crisis to identify looming risks to the financial system, reiterated its call for Congress to pass legislation that allows U.S. regulators to police spot markets for crypto assets that aren’t securities.
The council also said lawmakers need to address regulatory arbitrage, when companies take advantage of more favorable or lighter regulation in multiple jurisdictions to circumvent tighter oversight in the U.S.
The group uses data from the Consumer Financial Protection Bureau, the Federal Trade Commission and the Securities and Exchange Commission, among other agencies, to spotlight fraud in crypto. Of 8,300 crypto complaints received by the CFPB’s Consumer Complaint Database between October 2018 and September 2022, 40% appeared to be a “fraud or scam.”
Over 46,000 people lost more than $1 billion on crypto trading to scams and fraud between Jan. 1, 2021 through March 31, according to the FTC.
Since fiscal year 2019, the SEC has received…
