Cryptocurrency Chaos: US Lawmakers Face Backlash After FT Collapse

  •    As a result of FTX’s decline, US lawmakers are reassessing the regulatory requirements for the crypto industry in 2023.

According to a recent report, pressure is mounting on US lawmakers as a result of the failure of the cryptocurrency exchange FTX. The US Virgin Islands-based exchange abruptly closed down earlier this year, leaving its consumers with substantial losses. Stronger regulation of the cryptocurrency business has been demanded as a result of the occurrence.

In light of the collapse of FTX, legislators in the US appear to be reassessing the crypto business and its regulatory requirements. According to The Wall Street Journal, policymakers are under pressure to enact new cryptocurrency rules as a result of the Bitcoin exchange declaring bankruptcy in November.

Legislators are urging the Securities and Exchange Commission (SEC) to take a strong stance toward the cryptocurrency industry.

Rep. Jake Auchincloss, a member of the bipartisan Congressional Blockchain Caucus, reportedly said in a December House hearing that “it’s time for the blockchain investors and entrepreneurs to build things that matter or to lose more credibility,” adding that “white papers and podcasts” are all that cryptocurrency has offered in the past 14 years.

Senator Roger Marshall is a supporter of tougher regulation in the US and believes that blockchain technology has the ability to reduce fraud. He said, “Someone needs to persuade me that it’s not all just a Ponzi game.

Rep. Patrick McHenry, one of the few lawmakers prepared to speak out in favor of the crypto sector, said it is essential “to separate out the negative activities of an individual from the good provided by an industry and an innovation.” In the upcoming Congress, McHenry will serve as chairman of the House Financial Services Committee.

Sam Bankman-Fried, a former CEO of FTX, lobbied for a law in Washington that would empower the Commodity Futures Trading Commission (CFTC) to oversee cryptocurrencies. The law was supposed to be a part of the 2023 budget spending package, but given the recent events, it is now unlikely to move forward.

Bankman-Fried was a sizable donor to both Democrats and Republicans in Washington, according to Cointelegraph. He proposed investing up to $1 billion earlier this year in order to influence the 2024 presidential election campaigns.

The failure of FTX has increased pressure on US politicians to tighten oversight of the bitcoin market. It’s imperative that regulators play a more active role in monitoring exchanges and adopting more precise rules for their operation in order to safeguard investors and stop instances like this from happening again. Investors should perform their due diligence before selecting a cryptocurrency exchange and confirm that it is open and secure.