ToomeyPat 092022 AP

Senate Banking panel leaders call for new crypto rules after FTX collapse

The Democratic and Republican leaders of the Senate Banking Committee called on Congress to strengthen oversight and regulation of cryptocurrencies Thursday amid the ongoing collapse of a major cryptocurrency exchange.

Sen. Sherrod Brown (D-Ohio), chairman of the Banking Panel, and Republican Sen. Pat Toomey (Pa.) each said the crisis facing FTX, one of the world’s most prominent cryptocurrency trading platforms, highlights the need for adequate federal rules and oversight.

“The cryptocurrency market’s continued turbulence is why we need to think carefully about how to regulate cryptocurrencies and their role in our economy,” Brown said in a statement.

“It is crucial that our financial watchdogs look into what led to FTX’s collapse so that we can fully understand the misconduct and abuse that took place.”

In a series of tweets, Toomey said the collapse of FTX “underscores the need for a sensible regulatory regime.”

“The crypto sector operates with far too much ambiguity because (a) regulators refuse to provide clear guidance to well-intentioned actors and (b) lawmakers refuse to act,” Toomey tweeted.

“We need to start by finding common ground in the lame duck with stablecoin regulation,” he said, referring to digital tokens issued that are meant to hold a fixed value.

FTX and its founder, Sam Bankman-Fried, are facing bankruptcy and federal investigations after revelations about its questionable finances prompted a massive run on its books. The company’s clients attempted to withdraw $6 billion from FTX accounts, teetering on the brink of bankruptcy.

Bankman-Fried tried to save FTX through a sale of the company to Binance, its main competitor, in an effort to make its customers whole. But Binance pulled out of the deal on Wednesday, saying FTX’s financial situation was too precarious to save.

Several media outlets also reported Thursday that Bankman-Fried secretly funded bets through his investment firm, Alameda Partners, with money deposited by FTX account holders.

Related Posts