Following the collapse of Sam Bankman-Fried’s FTX, which included a significant US subsidiary, legislators and regulators in Washington appear to be blaming each other. Speaking at a senate hearing last week, John Kennedy, a Republican senator from Louisiana, asked lawmakers to clarify the lack of regulatory oversight that allowed recent events to transpire.
“Can you tell me who in our federal financial services regulatory administrative state was watching FTX to make sure no one there stole people’s money?” Kennedy asked.
US Treasury Secretary Janet Yellen was another figure to highlight vulnerabilities in oversight. In a statement issued Wednesday, she emphasized that the collapse of FTX “demonstrates the need for more effective oversight of cryptocurrency markets” and that crypto assets should be afforded the same safeguards as those traded on regular exchanges.
However, the majority of banking regulators reportedly argued that these questions must be deflected towards the likes of the Securities and Exchange Commission and Commodity Futures Trading Commission.
SEC under fire
According to some lawmakers, who are often viewed as SEC critics, the agency has concentrated on headline-grabbing enforcement measures like prosecuting Kim Kardashian for unlawfully advocating crypto rather than confronting structural risk in the industry. Furthermore, they also urged SEC Chair Gary Gensler to properly define the policies regarding digital assets.
On the other hand, Gensler has stated that current securities regulations are sufficient and has frequently pushed crypto platforms to register with the agency on the basis that most tokens qualify as securities, as is the case with blockchain payments platform Ripple.
Meanwhile, CFTC chair Rostin Behnam has voiced a similar opinion, stating that existing laws are well-defined.
Gary Gensler FTX controversy
Attorney and XRP enthusiast John Deaton has gone public with a campaign to have lawmakers investigate the SEC head and his connections to Sam Bankman-FTX, Fried’s, which has come under examination in light of the current climate.
The controversy was fueled over the fact that Caroline Ellison, whom Bankman-Fried named CEO of Alameda Research, has family links to Gensler through her father, Glenn Ellison, a former MIT colleague of Gensler’s.
