Senators Debbie Stabenaw (Democrat) and John Boozman (Republican) led a hearing on Thursday pushing through their bill to give the Commodity Futures Trading Commission (CFTC) more authority to regulate digital products.
WASHINGTON – Several legislators from the United States Senate on Thursday advocated regulating the cryptocurrency market in view of the collapse of the FTX platform , whose collapse has caused several cryptocurrencies to lose value.
In an appearance in the Upper House, which was still continuing at noon on Thursday, Senators Debbie Stabenaw (Democrat) and John Boozman (Republican) defend US Senators Seek to Regulate Cryptocurrency Market After FTX Collapseed their proposed legislation to give more authority to the Commodity Futures Trading Commission. (CFTC) to regulate digital products.
CFTC Chairman Rostin Behnam, who was questioned at the hearing , said the law would have prevented much of the behavior by FTX and its affiliated companies that ultimately led to their collapse.
“We are here because a lot of Americans have invested in a new product and they are probably going to lose money because the markets for digital products do not enjoy the basic protections … that make the American financial markets the envy of the world,” Behnam said during his speech. opening statement.
During the hearing, both Democratic and Republican members of the Senate were in favor of increasing oversight of the cryptocurrency market , although they acknowledged that there is a knowledge gap on how this technology works that makes it difficult to move quickly in this area.
Some Republicans, in fact, went so far as to propose a (at least temporary) ban on cryptocurrencies in the United States , something Behnam opposed since “cryptocurrencies would continue to exist abroad, and their risks would end up coming back to us somehow.” way”.
For their part, some Democrats, such as Illinois Senator Dick Durbin, were skeptical that a relatively small office like the CFTC (which is sometimes seen as the “soft” version of the US Securities and Exchange Commission, the SEC) can regulate such a broad market
Broker, lender and custodian
One of the specific characteristics of the FTX business model most criticized by the head of the CFTC was the fact that the platform functioned as a broker, lender and custodian of its clients’ money , something that does not occur in traditional financial systems.
Behnam argued that the legislation proposed by Stabenaw and Boozman would have prevented the alleged illegalities committed by FTX and many of its affiliated companies, citing the case of LedgerX, a US subsidiary under CFTC supervision that has not been as affected. by the crisis and will be able to pay its customers.
The head of the office assured that the regulations that regulate LedgerX in the United States are the basis of the legislation they propose to supervise the cryptocurrency market.
On November 11, the FTX platform, which was once valued at $32 billion, filed for bankruptcy after a large number of clients rushed to withdraw their funds, causing a liquidity crisis.
Its founder and until then chief executive officer, Sam Bankman-Fried, one of the most recognizable faces in the cryptocurrency business, resigned , after which a new board led by bankruptcy expert John Jay Ray III was appointed.
Ray and lawyers for the new board maintain that a “substantial amount” of the company’s assets may have been stolen or are missing.
The new managers have also denounced that the company had a “total absence of corporate controls” and a lack of “reliable financial information”.
The Wall Street Journal newspaper, citing anonymous sources, said Wednesday that the Department of Justice and the SEC are investigating the company.