If only sophisticated investors were hung on their own petards by going all in on cryptocurrency trading before the spectacular collapse of the crypto exchange FTX, Congress reasonably might shrug its shoulders.
But the complex cryptocurrency space draws all types of investors — from the experienced and sophisticated to those who jump in due to hype and fear of missing out. Now it could not be clearer that the federal government must regulate cryptocurrency trading to ensure its honesty.
FTX is an exchange, a platform where investors could trade cryptocurrency. But it owned a related company, Alameda Research, that issued its own cryptocurrency and used other people’s money from the FTX exchange. The exchange collapsed after a trade publication acquired and published an FTX “balance sheet” that did not comport with standard auditing practices or reality.
At a recent Senate subcommittee hearing, regulators from the Securities and Exchange Commission, the Commodity Futures Trading Commission and several agencies that oversee banking could not provide a definitive answer when asked who was responsible for crypto oversight.
Congress clearly must ensure effective crypto regulation by legislating it or directing the agencies, as suggested by former FDIC head Sheila Bair, to agree on a regulatory protocol using their existing authority.
Crypto has been trying to draw in mainstream investors, as in actor Matt Damon’s 2021 Super Bowl ad for Crypto.com, in which he declared that “fortune favors the brave.” The FTX debacle demonstrates that fortune favors the regulated.
— Republican & Herald, Pottsville via TNS
