United States lawmakers with the Senate Banking Committee had their share of crypto proponents and skeptics in a hearing exploring the collapse of the FTX exchange.
In a Dec. 14 hearing on ‘Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers’, many senators reiterated views on crypto they had held seemingly without considering the events leading up to the collapse of FTX and the arrest of Sam Bankman-Fried. Unlike in a Dec. 13 House hearing — in which FTX CEO John Ray was the sole witness — the Senate hearing featured a mix of anti- and pro-crypto figures from business, entertainment, and higher education.
Pennsylvania Senator Pat Toomey, who has previously expressed support for the U.S. introducing a digital dollar, compared cryptocurrencies to software rather than currencies, arguing that an outright ban of digital assets wouldn’t solve the problems that led to FTX’s financial issues. The Cato Institute’s Jennifer Schulp and investor Kevin O’Leary echoed many of the lawmaker’s sentiments, saying that crypto wasn’t entirely to blame in FTX’s demise, but rather having unregulated companies in charge of user assets.
“The 2008 financial crisis involved obvious misuse of products related to mortgages — did we decide to ban mortgages?” said Toomey. “With FTX, the product is not the instruments that were used, the problem was the misuse of customer funds, gross mismanagement, and likely illegal behavior.”
The senator added:
“Some of my colleagues have suggested somehow pausing cryptocurrency before we pass legislation. This is a profoundly misguided not to mention impossible idea. Short of enacting draconian authoritarian policies, cryptocurrency cannot be stopped.”
Law professor Hilary Allen, one of the crypto skeptics appearing as a witness at the hearing, argued that Bankman-Fried had been lobbying hard to have regulations favorable to his firm under the jurisdiction of the Commodity Futures Trading Commission, or CFTC. Hollywood star Ben McKenzie, who also testified at the hearing, said cryptocurrencies qualified as securities under the Securities and Exchange Commission’s regulatory umbrella.
“Sam Bankman-Fried and the rest of the crypto industry weren’t looking for [regulatory] clarity on the current law,” said Allen. “They were looking for changes in the law that would accommodate the industry. In particular, they wanted to be…
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