Crypto could ‘crash’ the global financial system: US senator

Cryptocurrency‘s latest turmoil, coupled with what has happened in recent months, paints a picture of an ecosystem that could distabilise the global financial system, Senate Banking Committee Chair Sherrod Brown has said.

According to the US lawmaker, crypto has been used for pretty much everything illegal, including outright theft and fraud. 

“The last thing” anyone would want to see, he noted, is the new financial product ending up crashing the financial system.

FTX collapse one of red flags

His comments at a hearing involving top US banking regulators come at a time when crypto is again in the spotlight following the collapse of major crypto exchange FTX. 

The company was founded by Sam Bankman-Fried, who before his ‘empire’s collapse’, was a darling of Capitol Hill.   

But FTX’s implosion and reports of misuse of customer funds by Alameda Research, is already seeing increased activity across Washington and in other regions.

“The parallels to past financial crises throughout our history are troubling,” he said during the committee hearing, comments reported by The Block. The legislator, who has previously slammed crypto, continued to warn that there’s nothing “beneficial” to be gotten out of “hundreds of speculative cryptocurrencies.”

On what the outlook is across the legislative divide, Brown said:

“Many on my side of the aisle have raised warning flags about this. The last thing we need is for risky new financial products to crash our financial system. Thank you to those of you on the panel for your skepticism about cryptocurrencies.”