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Wringing its hands over FTX’s collapse, Washington hopes to prevent more crypto pain | WUWM 89.7 FM

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Lawmakers are stunned to see the repercussions of the sudden collapse of cryptocurrency firm FTX.

“FTX was more than just an exchange,” said Senator Pat Toomey (R-Pennsylvania), an influential member of the Senate Banking Committee, whose personal investments include cryptocurrencies. . “This is different.”

So far, however, Congress’ reaction has been well-known.

Lawmakers issued short statements, and relevant committees, including the House Financial Services Committee, Senate Banking Committee, and Senate Agriculture Committee, pledged to hold public hearings. However, there is still no clear path to comprehensive cryptography.

In an interview, Toomey blamed his colleagues for not doing more.

“I think congressional inaction and regulatory inconsistency and confusion contribute to this problem,” he said.

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Getty Images

“This time it’s different,” says Sen. Patrick Toomey (R-PA), a senior member of the Senate Banking Committee.

New Uses for Old Laws

Thousands of FTX Customers Desperate try to recover money that may be lost forever The whole world is desperate to contain the damage caused by the bankruptcy of the multi-tentacle cryptocurrency exchange.

As lawmakers debated how to respond, regulators and law enforcement launched an investigation into the company, once valued at tens of billions of dollars.

FTX’s new CEO has responded to “a number of investigations” from the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC) and federal prosecutors, according to court filings.

But when it comes to digital assets, including cryptocurrencies, bureaucrats are trapped A turf war over who is responsible for overseeing what.

CFTCs, The chief executive of the multi-trillion dollar derivatives market says Bitcoin needs to be regulated.

The SEC argues that most cryptocurrencies are securities such as stocks and should follow the same rules. Its chairman, Gary Gensler, wants companies to provide investors with more information and be more open about the risks of digital assets.

On Monday, Senate Agriculture Committee chairmen and executives Sen. Debbie Stabenow (D-Michigan) and John Boozman (R-AR) announced the hearing. .

The two senators are among the sponsors of a bill called the Digital Goods Consumer Protection Act that would assign more regulatory responsibility to the CFTC. especially, Bankman-Fried supported legislation.

In the absence of new legislation, regulators are relying on existing laws, many of which predate the advent of cryptocurrencies, in hopes of preventing the spread of contagion.

In an onstage interview at a recent conference, CFTC Chairman Rostin Behnam said his agency has the tools necessary for his agency-registered crypto companies to comply with its rules and regulations. I was.

“We will use that authority to the fullest extent possible within the limits of the law,” he promised.

However, many individuals and businesses do not register with governments, even though regulators encourage them to do so.

During his tenure at the SEC, Gensler said the crypto industry was open to the public, and he and his colleagues were happy to discuss the regulations in place. Bankman-Fried said he met with Gensler twice in the past, according to the chairman’s official calendar.

With encouragement from the White House, the SEC, and the CFTC have stepped up enforcement against bad actors in cryptocurrencies in recent years. Both can be prosecuted and can carry fines and other penalties.

But tougher regulations require more resources, regulators said. As such, Benham and Gensler are not only asking Congress to clarify its regulatory responsibilities for cryptocurrencies, but they are also asking for a larger budget.

Senator Cynthia Lummis (R-Wyoming), chair of the Financial Innovation Caucus, said at a Banking Commission hearing last week about the FTX debacle:

Bitcoin owner Lumis, along with Sen. Kirsten Gillibrand (D-New York) in June, introduced legislation, a comprehensive framework for regulating cryptocurrencies and other digital assets.

But its future remains uncertain. The bill has not reached the Senate floor for a vote.

Copyright 2022 NPR. For more information, please visit https://www.npr.org.

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