The collapse of crypto exchange FTX and other bearish events in the space were at the center of discussions among lawmakers and witnesses at the inaugural hearing of the Subcommittee on Digital Assets, Financial Technology, and Inclusion of the United States House Committee on Financial Services. USA.
Addressing lawmakers at the March 9 hearing, BitGo Co-Founder and CEO Mike Belshe criticized the US Securities and Exchange Commission for enforcement actions against crypto companies that “try to get it right” – i.e. contact regulators and seek a way to operate in the country. He cited BitGo’s experience during the process of approaching the SEC in 2018, seeking a regulatory path forward on the question of how the company should hold assets, only to wait more than four years for a definitive answer.
According to Belshe, the SEC’s reluctance to address a “core” regulatory issue like a Bitcoin (BTC) exchange-traded fund’s issuance apparently could have opened the door for bad actors like Sam Bankman-Fried to operate FTX as it did. he. The former CEO faces charges from the SEC, the Commodity Futures Trading Commission and federal prosecutors related to the transfer of user funds between the exchange and Alameda Research.
“You have to wonder if we couldn’t have prevented the huge amounts of money flowing into FTX if the SEC had provided and approved the basic principle of a Bitcoin ETF,” Belshe said. “There were more than 25 valid applications, some from Invesco and other big-name firms that have done ETFs for many years in the past.”
Much of the discussion among lawmakers and industry experts at the hearing centered on which federal agencies might regulate certain crypto assets should Congress pass related legislation. Some House Republicans appeared to be particularly critical of the Biden administration’s approach to cryptocurrency, as evidenced by the hearing headline calling his actions an “attack on the digital asset ecosystem.”
“This report outlines President Biden’s political plan to illegally abuse administrative status to push US crypto companies and their US clients into offshore, unregulated, opaque and insecure markets,” said Rep. Tom Emmer, citing a report from 27 September. January from the White House. on mitigating the risks associated with cryptocurrencies. “This administration is arming the banking sector to unseat legal crypto activity here in the US, using scare tactics to drive an entire industry out of the country.”
#occurring now: President @FrenchRepHill convenes the Subcommittee on Digital Assets, Financial Technology and Inclusion for a hearing on the Biden Administration’s attack on the digital asset ecosystem.
Tune in https://t.co/FGQaA37IYN pic.twitter.com/DqBA6O5rcc
— Republican Party of Financial Services (@FinancialCmte) March 9, 2023
Other witnesses in the hearing were more critical of cryptocurrencies as a whole rather than focusing on a single agency, political party, or presidential administration. Rep. Brad Sherman, a well-known critic of the space, referred to cryptocurrencies as a “scourge” on the economy. Lee Reiners, the policy director at Duke’s Center for Financial Economics, claimed that while FTX was a “bad apple,” the entire crypto industry was “rotten.”
“Cryptocurrencies and the unique nature of cryptocurrencies were what fueled the rise of FTX, and it is what caused FTX to crash in the blink of an eye,” Reiners said.
Related: Samsung Investment Arm to Launch Bitcoin Futures ETF Amid Rising Interest in Crypto
The House subcommittee hearing was the first in the new session of Congress to address issues related to the crypto market and the FTX collapse since December 2022. Lawmakers from the Senate Banking Committee held their own hearing to explore the impact of the “crypto crash” in February.
