What can Washington do to prevent another crypto collapse? : NPR ( News Washington )

Sam Bankman-Fried, then FTX’s CEO, appeared before the House Financial Services Committee in December 2021. Its chairman, Rep. Maxine Waters (D-CA), says he expects to testify again soon.

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Sam Bankman-Fried, then FTX’s CEO, appeared before the House Financial Services Committee in December 2021. Its chairman, Rep. Maxine Waters (D-CA), says he expects to testify again soon.

Alex Wong / Getty Images

Legislators look on, stunned by the sudden crypto crowd.

“FTX was not another exchange,” according to Sen. Pat Toomey (R-PA), ranking senator of the Senate Banking Committee, whose personal investments include cryptocurrency. “This is different.”

But so far the response of the Council has been familiar.

Legislators issued brief statements, and relevant committees, including the House Financial Services Committee, the Senate Banking Committee, and the Senate Agriculture Committee, promised to hold hearings. But there is still no clear path to comprehensive crypto laws.

In the interview, Toomey criticized his colleagues for not doing more.

“I think the delay in the meeting and the inconsistency and confusion of the directors contributed to this problem,” he said.

“This time is different,” said Sen. Patrick Toomey (R-PA), ranking senator of the Senate Banking Committee, has again called on his colleagues to pass comprehensive crypto legislation.

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“This time is different,” said Sen. Patrick Toomey (R-PA), ranking senator of the Senate Banking Committee, has again called on his colleagues to pass comprehensive crypto legislation.

Kevin Dietsch / Getty Images

A new use for old laws

Thousands of lost FTX customers are trying to recover money that can go out for good and the whole world is worried to contain any loss from the bankruptcy of the multi-tenancy crypto exchange.

As lawmakers debate how to respond, regulators and law enforcement agencies have begun investigations into the company, once valued at tens of billions of dollars.

The new CEO of FTX has issued “numerous inquiries” from the Commodity Futures Trading Commission (CTC), the Securities and Exchange Commission (SEC), and federal prosecutors, according to a court filing.

But when it comes to digital assets, including cryptocurrencies, government officials are locked in a turf war over who cares.

This cfTct; top cop for the multi-trillion dollar derivatives market, argues that bitcoin should be regulated.

The SEC claims that most cryptocurrencies are securities, like stocks, and should be subject to the same rules. Its chairman, Gary Gensler, wants companies to provide investors with more information, and raise more about the risk of digital assets.

On Monday, Senate Agriculture Committee chair and ranking member Sens. Debbie Stabenow (D-MI) and John Boozman (R-AR) announced a hearing: “Why Congress Needs to Act: Lessons Learned from the FTX Collapse” at Behnam.

The two senators are among the sponsors of a bill called the “Digital Goods Consumer Protection Act,” which places more regulatory responsibility on the CfTc. especially Bankman-Fried accepted the laws.

Absent new legislation, regulators relied on existing laws, many of which they hoped would prevent the spread of contagion before the advent of crypto.

During an on-stage interview recently at the conference, CfTc Chair Rostin Behnam said that his agency has the tools that crypto-registered companies need to ensure that they comply with the agency’s mandates and regulations.

“We will use that authority to the full extent of the law,” he promised.

But many people and companies are not registered although the directors were encouraged to govern.

During his tenure at the SEC, Gensler said the door to the crypto industry is open, and he and his colleagues are happy to talk about the issues that are in place. Bankman-Fried has met with Gensler twice before, according to the chair’s official schedule.

With the encouragement of the White House, the SEC and CfTc have doubled down on enforcement against bad actors in crypto in recent years. Both can carry criminal charges and many other penalties.

But law enforcement requires more resources, regulators say. So, Benham and Gensler aren’t just asking Congress to come up with more clarity on their regulatory roles when it comes to crypto — they also want broader policies.

“You know, it’s terrible, and at the same time, it’s not surprising at all,” said Senator Cynthia Lummis (R-WY), who chairs the Financial Innovation Caucus, when she addressed the collapse of FTX last week in a banking committee hearing.

Lummis, who owns bitcoin, the bill of Sen. Kirsten Gillibrand (D-NY) introduced in June a comprehensive framework for regulating cryptocurrencies and other digital assets.

But the future is uncertain. That legislation did not make it to the Senate floor for a vote.