“It is important to have a clear understanding of the sequence of events and management failures that led to this collapse. Brad Sherman (D-Calif.) is one of the industry’s most vocal skeptics of Capitol Hill. “So far, millions of dollars have poured into Washington in donations and lobbying spending on campaigns to deter meaningful legislation by billionaire crypto bloggers.”
By pointing out who missed the collapse coming, the regulators are defending themselves, warning that there was nothing they could do because FTX’s parent company is offshore. The chairman of the commission said on Monday that it was urgent for Congress to pass legislation that would give his agency powers.
“We are running out of time,” said CFTC Chairman Rostin Behnam. “If you wait, you are waiting for the next crisis.”
The uproar has the potential to upend Washington’s crypto controversy as industry champions find themselves losing influence.Crypto Critics Like Senate Bankers sherrod brown (D-Ohio) and Sen. Elizabeth Warren (D Massachusetts), whose cheerleaders nearly drowned out warnings about the industry’s excesses, is using the moment to crack down on what’s left of the ailing industry.
“I have always focused on fraud, fraud, volatility and outright theft in the crypto industry,” Brown said in a statement Monday. It proves why we need a comprehensive regulatory approach that protects people and our economy from cryptocurrency risks.”
The crisis, which includes potential fraud, misuse of customer accounts, and allegations of terrible internal accounting practices admitted by Bankman-Fried itself, threatens to derail the laws digital asset industry startups have defended. .
One bill, backed by FTX from top Democrats and Republicans on the Senate Agriculture Committee, would give the Securities and Exchange Commission’s sister agency, the CFTC, broader oversight over digital currency exchanges and brokerage firms. The law is ready for a committee vote in the coming weeks. This would have been a big win for crypto assets trying to avoid regulation by the SEC. After the Senate, lobbyists now think legislation is behind. John Boozman The GOP’s primary co-sponsor, the Republican Party of Arkansas, said it was undergoing a “top-down investigation” following the collapse of FTX.
FTX lobbied hard to endorse legislation from Boozman and Senate Agriculture Chairman Debbie Stabenow (D-Michigan). Congressional staff also drafted the bill in consultation with CFTC leaders.
SEC Chairman Gary Gensler, who has spent much of his time warning of the risks to cryptocurrency consumers under the Biden administration, said the bill was “too light” after the FTX bankruptcy, citing the company’s support for the proposal. cited the support of The law allows crypto trading platforms to make their own determination as to whether the tokens on their platforms comply with financial regulations through a process known as self-certification.
“This is really a chance to look in the mirror and say, ‘Is the proposal we’re proposing here the right one, or is it flawed from the start?'” Mark analyst advocating for tighter crypto regulation Mr Hayes. “In the latter case, they have to start over.”
Stabenow and Boozman say they want to move forward with the bill, but face fierce opposition from consumer advocacy groups who have denounced the bill as an example of FTX’s political clout. Blockchain Association, venture firm Andreessen Horowitz, Other crypto industry players, such as the DeFi Education Fund, have also challenged the bill because it would limit decentralized financial networks while bolstering centralized operations like FTX. .
“It’s still hard to get anything done quickly,” said one lobbyist, who requested anonymity to speak candidly about negotiations on the bill. “Infections will spread further. As more facts are obtained, they will have to make changes. More companies will go bankrupt. I doubt that’s happening with the lame duck.”
The episode puts the spotlight on the CFTC’s role in its response to the FTX debacle and the question of whether it should be given new powers to oversee the industry.
Benham, who served as an aide to Stabenow before taking over the agency, said lawmakers should give the CFTC the power to regulate digital asset markets. He said that Better Markets, one of his prominent consumer advocacy groups, through the regulation of FTX’s U.S.-based subsidiary, oversees his Bahamas-based parent company of FTX. I failed,” and made a sales pitch. Reports that Bankman-Fried’s business empire exploited his FTX client funds are the same as his MF Global bankruptcy in 2011, an accident that occurred under the agency’s oversight.
Before FTX’s bankruptcy, Bankman-Fried and FTX US’s head of policy, Mark Wetjen — a former acting chairman of the CFTC — urged the company to sign a plan that would allow it to lend whole money to retail investors. I worked at the store. clock crypto trading. Wetjen removed the company from his LinkedIn profile late last week and deleted his Twitter account, which included his job title.
Behnam said the problem was the CFTC’s lack of ability to police the activities of the central FTX operation in the Bahamas. The CFTC’s international reach has been a contentious policy debate since Congress expanded its powers following the 2008 financial crisis, when offshore derivatives trading by AIG nearly overthrew insurers.
“We don’t have authority to go through the regulated entity itself,” Behnam said, referring to US companies under its jurisdiction. “But these are the types of questions we have to ask to see what the non-U.S. entities are, what their relationships are like, and whether we want to break through them. ”