Crypto investors suffered a series of blows this year from the collapse of the FTX exchange, to the crash of stablecoin TerraUSD and the decline of Bitcoin. It is like froth: multiple bubbles are bursting one after another," Panetta said in a speech in London. Unbacked crypto assets are a form of financial gambling without any socially or economically useful function, so the task is to thwart criminal activity, protect unassuming investors and save a financial system that may become increasingly intertwined with crypto assets, Panetta said. The links between the crypto market and the financial system could strengthen, especially if major tech companies enter the sector, meaning regulation is urgently required, Panetta said. Regulatory efforts should be directed primarily at preventing the use of crypto-assets to circumvent financial regulation and in shielding the mainstream financial system from crypto risks, Panetta said.

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