Senate FTX hearing: calls for regulation and crypto criticisms aplenty

United States lawmakers with the Senate Banking Committee had their stock of crypto proponents and skeptics successful a proceeding exploring the illness of the FTX exchange.

In a Dec. 14 proceeding connected ‘Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers’, galore senators reiterated views connected crypto they had held seemingly without considering the events starring up to the illness of FTX and the apprehension of Sam Bankman-Fried. Unlike successful a Dec. 13 House proceeding — successful which FTX CEO John Ray was the sole witnesser — the Senate proceeding featured a premix of anti- and pro-crypto figures from business, entertainment, and higher education.

Pennsylvania Senator Pat Toomey, who has antecedently expressed enactment for the U.S. introducing a integer dollar, compared cryptocurrencies to bundle alternatively than currencies, arguing that an outright prohibition of integer assets wouldn’t lick the problems that led to FTX’s fiscal issues. The Cato Institute’s Jennifer Schulp and capitalist Kevin O’Leary echoed galore of the lawmaker’s sentiments, saying that crypto wasn’t wholly to blasted successful FTX’s demise, but alternatively having unregulated companies successful complaint of idiosyncratic assets.

“The 2008 fiscal situation progressive evident misuse of products related to mortgages — did we determine to prohibition mortgages?” said Toomey. “With FTX, the merchandise is not the instruments that were used, the occupation was the misuse of lawsuit funds, gross mismanagement, and apt amerciable behavior.”

The legislator added:

“Some of my colleagues person suggested someway pausing cryptocurrency earlier we walk legislation. This is simply a profoundly misguided not to notation intolerable idea. Short of enacting draconian authoritarian policies, cryptocurrency cannot beryllium stopped.”

Senator Pat Toomey addressing the Senate Banking Committee connected Dec. 14

Law prof Hilary Allen, 1 of the crypto skeptics appearing arsenic a witnesser astatine the hearing, argued that Bankman-Fried had been lobbying hard to person regulations favorable to his steadfast nether the jurisdiction of the Commodity Futures Trading Commission, oregon CFTC. Hollywood prima Ben McKenzie, who besides testified astatine the hearing, said cryptocurrencies qualified arsenic securities nether the Securities and Exchange Commission’s regulatory umbrella.

“Sam Bankman-Fried and the remainder of the crypto manufacture weren’t looking for [regulatory] clarity connected the existent law,” said Allen. “They were looking for changes successful the instrumentality that would accommodate the industry. In particular, they wanted to beryllium regulated by the CFTC, and not the SEC. I respectfully taxable that Congress should not follow authorities to that end.”

Different lawmakers projected alternate authorities aimed astatine regulating definite parts of the crypto abstraction — though nary appeared to stem from the events astatine FTX. Senator Toomey suggested opening regularisation with stablecoins, pointing to a framework helium introduced successful April arsenic good arsenic a bill from Senator Cynthia Lummis and SenatoKirsten Gillibrand successful June.

Senator Elizabeth Warren, a good known skeptic of cryptocurrencies successful Congress, utilized her clip to propulsion associations betwixt integer assets and the financing of coercion and ransomware payments. Together with Senator Roger Marshall, she introduced a bill requiring further Anti-Money Laundering, oregon AML, policies for wealth work businesses arsenic good arsenic mounting up AML rules and reappraisal processes astatine the Treasury Department, SEC, and CFTC.

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Many U.S. lawmakers turned their attraction to Bankman-Fried and FTX pursuing the bankruptcy filing of the crypto speech and allegations the erstwhile CEO utilized idiosyncratic assets to money investments astatine Alameda Research. Authorities successful the Bahamas arrested Bankman-Fried connected Dec. 12 arsenic portion of extradition proceedings with the United States. He volition beryllium held without bail until astatine slightest February.

The Senate proceeding was the 3rd exploring the illness of FTX pursuing a Dec. 1 proceeding of the Senate Agriculture Committee and a Dec. 13 hearing of the House Financial Services Committee. The House committee said it plans to clasp a 2nd proceeding connected FTX sometime successful 2023.