Klarna chief warns of tech crackdown after collapse
THE chief executive of buy-now-paylater (BNPL) firm Klarna says he fears the implosion of FTX will lead to an overly harsh regulatory crackdown on the financial technology sector. Sebastian Siemiatkowski warned tougher regulations would make it harder to compete with traditional lenders and leave consumers with less choice.
He claimed the “fairly scary” collapse of cryptocurrency exchange FTX would be used by the “traditional bank industry ... to again regulate this industry to the disadvantage of consumers”.
“We need more competition in the banking industry, we need good con- sumer protection laws but that don’t stifle competition,” he told Bloomberg yesterday.
The rapidly growing BNPL sector has drawn concerns that BNPL offers could leave people saddled with large debts they cannot afford. Under changes announced by the Treasury, lenders will have to carry out affordability assessments before offering customers payment-splitting plans from next year.
Firms will also be supervised by the Financial Conduct Authority for the first time and customers will gain the right to take complaints to the Financial Ombudsman Service.
FTX filed for bankruptcy following a liquidity crisis that left the crypto exchange unable to meet customer demands for billions of dollars worth of withdrawals. In bankruptcy filings, the company revealed it has more than 100,000 creditors.
John Ray, the liquidator who returned billions to Enron creditors after the power company’s 2001 collapse, has been appointed to oversee FTX’S affairs.