Leading US lawmakers took action due to the dramatic collapse of crypto exchange FTX. The FTX crisis has sparked increased calls for more regulation and faster legislative action. Here are the statements of the US senators on the subject…
FTX collapse moves US senators
cryptocoin.com As we reported earlier this week, FTX CEO Sam Bankman-Fried announced that there was a “liquidity shortage” in his stock market. Later reports suggested that FTX was bringing in client funds with Alameda Research, another company founded by Bankman-Fried. Currently, FTX has a deficit of approximately $10 billion and has frozen withdrawals on its exchange. FTX US, the US arm of the exchange, similarly warned that it could freeze trading in the coming days.
Some US lawmakers have issued statements expressing their concerns about the situation. Senator Sherrod Brown, who chairs the Senate Banking Committee, said in a statement:
The recent collapse of FTX is a loud warning that cryptocurrencies can fail, and just as we’ve seen with OTC derivatives sparking a financial crisis, these failures can have a ripple effect on consumers and other parts of our financial asset system. The ongoing turmoil of the crypto market is causing us to think carefully about how to regulate cryptocurrencies and their role in our economy. It is critical that our financial watchdogs investigate what led to FTX’s downfall so we can fully understand the abuses that occurred. I will continue to work to hold bad players in the crypto markets accountable. I am determined to find the best way forward to protect consumers and the stability of the US markets and banking system.
Senators drew attention to regulatory shortcomings
Senator Patrick Toomey, a senior member of the Senate Banking Committee, touched on the issue in a tweet. Toomey said, “The crypto industry operates with a lot of uncertainty. That’s because regulators refuse to provide clear guidance. Also, lawmakers are refusing to take action,” he said.
On the other hand, Maxine Waters, who chairs the House of Representatives Financial Services Committee, said in a statement:
The recent crash of FTX.com is the latest in a series of events that includes the collapse of cryptocurrency companies and the impact these failures have on consumers and investors. Although the US arm of FTX is reportedly in operation, FTX’s FTT tokens are now worthless and, worse still, FTX.com customers cannot access their funds. It is clear that cryptocurrencies operating without strong federal oversight and protections have significant consequences. For four years, under my leadership, the Financial Services Committee has spearheaded the study and research of the cryptocurrency market. […] This week’s news further highlights the urgent need for legislation.
Patrick McHenry: I look forward to learning more from FTX and Binance
Patrick McHenry, a senior member of the House Financial Services Committee, said in a statement:
For years I have advocated for Congress to develop a clear regulatory framework for the crypto-asset ecosystem, including trading platforms. Recent events illustrate the need for Congressional action. It is imperative that Congress establish a framework that allows innovation to flourish in the United States while ensuring that citizens have adequate protection. I look forward to learning more from FTX and Binance about the steps they will take to protect customers in the coming days.
Senator John Boozman, senior member of the Senate Agriculture Committee, said in a statement:
Events this week reinforce the need for greater federal oversight of the crypto-asset industry. This has been our goal since we started drafting the Digital Commodity Consumer Protection Act 2022. Working closely with our colleagues, financial regulators, academics and a wide range of industry participants, we have introduced a robust bill that aims to bring transparency and accountability to the people. While our legislative work continues, the CFTC already has the ability to regulate manipulation and abuse. I strongly recommend that they actively use these powers when necessary.
Cryptocurrency pro Cynthia Lummis also made a statement
Senator Cynthia Lummis, who is known for her positive attitude towards cryptocurrencies and is on the Senate Banking Committee, said in a statement:
Recent events between FTX and Binance are the clearest example of why we need clear rules for crypto asset exchanges in the US. Market manipulation, lending activity, and whether client funds and assets are properly protected are just some of the many issues that my colleagues and I will need to consider in the coming days. The transparent and fair exchange regulation provided in the Lummis-Gillibrand Responsible Financial Innovation Act is crucial to ensuring that customers are protected while continuing to foster responsible innovation.
Warren’s tweet drew backlash
“The collapse of one of the biggest crypto platforms shows just how “scamming” the industry is,” said Senator Elizabeth Warren, who sits on the Senate Banking Committee. He said he would continue to push the U.S. Securities and Exchange Commission (SEC) to make efforts to address the issue.
Warren’s tweet, in particular, caused a backlash from many crypto executives, including Coinbase CEO Brian Armstrong. Armstrong has been saying for some time that US regulators are pushing crypto traders out of the field by not providing clear rules for companies to follow. Meanwhile, SEC Chairman Gary Gensler has said on numerous occasions that he believes crypto exchanges should register as national securities exchanges.
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