US congressman Brad Sherman issued a statement addressing the cryptocurrency exchange FTX crisis on Nov. The councilor underlined the need for regulators to take urgent and aggressive measures with the collapse that occurred.
Sherman made the following statements on the subject:
“The unexpected collapse of one of the world’s largest crypto companies this week was a dramatic demonstration of both the risks inherent in digital assets and the critical vulnerabilities in the industry that has grown around them.”
“For years, I have argued that Congress and federal regulators need to take an aggressive approach despite the many threats to our society that cryptocurrencies pose,” Sherman said.
Brad Sherman explained his plans to review options for federal regulation with his colleagues in Congress:
“So far, efforts by the billionaire crypto brothers to deter meaningful legislation have been instrumental, with Washington pouring millions of dollars in campaign contributions and lobbying.”
“I believe it is now more important than ever that the SEC takes decisive action to end the regulatory gray area in which the crypto industry operates,” Sherman said.
On the other hand, Sherman made direct reference to former FTX CEO Sam Bankman-Fried on political donations to the Democratic Party. The congressman also mentioned Ryan Salame, FTX’s second CEO, who donated to Republicans in 2022.
It was also revealed that Bankman-Fried donated $39.8 million to both Democratic and Republican parties in the last 2022 US midterm elections. Almost $40 million in investment made Bankman-Fried the sixth largest donor.
Sherman advocates an aggressive approach to crypto regulations. Thomas Hook, Professor of Cryptocurrency Regulation at Boston University Law School, said in a recent interview with Cointelegraph that regulators should try to apply common sense regulation.
“[Düzenleyiciler] they are reacting to an emerging industry, but overregulating may be too much for this innovation […] Poorly thought-out regulation can lead to a two-pronged problem: first, it can limit US consumers’ participation in cryptocurrencies, and it can also drive the ecosystem and these businesses into less regulated jurisdictions.
“This creates more risk for customers,” Sherman said. “This pushes investors to work with less regulated entities to step into the ecosystem.”
On the other hand, these statements by Sherman came before the FTX collapse. Cointelegraph contacted Hook to see if this has changed in light of recent events.
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Among the most notable cryptocurrency regulations introduced to the US Congress are the Central Bank Digital Currency Labor Act of 2021, the Digital Commodity Consumer Protection Act of 2022 (DCCPA), the Stablecoin Transparency Act, and the Cryptocurrency Tax Clearance Act.
Future arrangements are expected to rally around the executive order of US President Joe Biden in March 2022. These regulations will aim to improve consumer and investor protection, promote financial stability, counter illegal financing, and improve the United States’ position in the global financial system, financial inclusion and sense of responsibility.