According to U.S. Sen. Tommy Tuberville (R-Auburn), Congress should pass regulations on cryptocurrencies after the recent collapse of the large cryptocurrency exchange FTX sent shockwaves through the industry.
The United States Senate Committee on Agriculture, Nutrition and Forestry will hear about the FTX collapse at 11 a.m. Thursday from Rostin Behnam, chairman of the Commodity Futures Trading Commission.
Tuberville, a committee member, said on a press call with Alabama reporters Wednesday morning that "there's currently not a consensus on how cryptocurrencies should be regulated, and Congress needs to act."
"Now, when FTX collapsed a few weeks ago, millions of users learned their funds had been lost," Tuberville told reporters. "This is unacceptable. Investigations by regulators and law enforcement are ongoing. The hearing tomorrow is an opportunity to discuss ways to protect Americans and American consumers moving forward. We must have a regulatory framework in this country for cryptocurrency. Other countries like Singapore, Bermuda, and the Bahamas have crypto regulations in place. Many crypto firms are moving their operations overseas. FTX is a prime example. They were headquartered in the Bahamas. Crypto needs to be regulated, and there are two bipartisan Senate bills in the works to do just that. Crypto companies need to be subject to the same capital requirements as banks and traditional financial companies if they're providing similar services. An American regulatory framework is also key to ensuring the U.S. remains the leader in financial innovation. It's a consumer protection issue and an economic issue."
According to CoinDesk, Sam Bankman-Fried, founder and former CEO of FTX, is currently being investigated by the Justice Department, the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and others.
Multiple outlets in November reported at least $1 billion to $2 billion of customer funds "vanished" from the exchange during the crash in November. FTX filed for bankruptcy in November.
Josh Rhodes, a Birmingham resident and founder of CryptoYall.com, told 1819 News in a phone interview Wednesday that "regulation is a two-edged sword."
"I do think we need regulation," Rhodes said. "The central exchanges typically are the problem in these scenarios. The centralization of companies like FTX when they go unregulated can implode much like it did along with four or five other of its sister industries and exchanges in 2022 already. The scary part about regulation is when the government oversteps and overregulates, which it has a history of doing. Then you start getting into really dismantling the essence and the idea of crypto, which is permissionless (and) trustless money exchange between peers and anonymity if they want to be. I just hope that they will regulate the central exchanges and not overregulate the consumers."
Rhodes said cryptocurrencies "will definitely survive" the FTX debacle.
"The funny thing is with the FTX scandal, everyone has a recency bias," Rhodes said. "This has happened before. It will happen again. There was a hack in 2014 of the main bitcoin exchange back then. 2014 in crypto years is a century ago. The Mt. Gox hack was a big, centralized debacle, much like FTX, and FTX is basically Mt. Gox part two. This isn't uncharted territory. The difference now is that you have way more billionaires, way more institutions, and way more retail investors who have adopted crypto. The market cap in 2014 versus the market cap now [is] very different. The adoption curve has matured enough to where now when central exchanges go down, powerful, wealthy people are affected, and that's why you start hearing Senators talk about regulation more aggressively than they did in 2015."
Before the collapse of his company when he was still flush with cash, Bankman-Fried was the subject of many news articles praising him for his donations to politicians, feel-good causes and left-wing media outlets.
Most of his political donations were to Democrats, but he also gave donations to Republicans and conservative groups, according to the Wall Street Journal.
Bankman-Fried's donations to conservative groups included $105K to the Alabama Conservatives Fund, a Super PAC affiliated with Republican U.S. Sen.-Elect Katie Britt (R-Montgomery), according to a recent report by the Daily Caller.
A spokesman for the Britt campaign told the outlet, "We had no involvement with that PAC's fundraising or spending activities. Looking at the FEC data, I do think it's noteworthy that the funds you're referencing represent only 2.5% of what that super PAC raised this cycle."
To connect with the author of this story, or to comment, email caleb.taylor@1819News.com.
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