FTX Shows “It’s Time” for Congress to Learn About…

Senator Cynthia Lummis, known as the “Bitcoin Senator” for her advocacy of the cryptocurrency sector on Capitol Hill has said that the collapse of the crypto exchange FTX highlights the need for Congress to “learn more” about cryptocurrencies.

In a pre-recorded interview with the Financial Times’ Crypto and Digital Asset Summit Senator Lummis, who introduced the bipartisan Responsible Financial innovation Act with fellow crypto advocate Kirsten Gillibrand, said that the fall of the crypto exchange FTX shows how critical it is for Congress to “learn more” about the crypto sector. The Senator described the crypto world as the “Wild West” in terms of having either inadequate or no, regulation. Lummis was probed regarding recent events associated with former FTX CEO Sam Bankman-Fried’s crypto empire to which she responded:

I hope it’s highlighted with members of Congress who have not taken the time to learn more about this asset class, that it’s time for them to learn more about it so we can engage in proper regulation.

Lummis highlighted the risks that FTX took with customers’ money, “based in large part on the reputation of Sam Bankman-Fried, and his extraordinary ability to garner the confidence of people to make big investments and take big bets on FTX.” Adding that it just goes to show “how influential certain people can be even over sophisticated and rich investors.”

Senator Lummis also said that if FTX has been complying with the Lummis-Gillibrand bill, it may not have collapsed because the regulation does not allow firms to bundle custody and other components of trading. Lummis said at the conference:

The Lummis-Gillibrand bill is a fairly comprehensive effort to integrate digital asset regulation with typical securities and commodities regulations in the United States. There is an emphasis on allowing for, and accommodating, the important innovations that are occurring in this space while at the same time protecting consumer assets and using our abilities on disclosure and consumer protection to the advantage of people who are engaging in this very special asset class.

She continued to say:

Consumers’ assets would have to be segregated and we would not allow all the functions that FTX had to be bundled into one trading entity.

Hopefully the fall of FTX and many that came before it urges regulators to take the industry more seriously and take action to institute appropriate regulation in an effort to avoid a situation such as this from arising once again.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.