On November 11, while the rest of the country was celebrating Veterans Day, Sam Bankman-Fried announced that FTX – one of the largest cryptocurrency exchanges in the world by volume – had filed for bankruptcy. Lawmakers and pundits quickly latched onto the rapid disintegration of FTX to demand more regulation of the cryptocurrency industry. The latest news confirms these fears [about consumer harm] And it highlights why prudent regulation of cryptocurrencies is needed,” said White House Press Secretary Karen Jean-Pierre.
It’s still not clear what exactly happened at FTX. Reports that between $1 billion and $2 billion of customer funds are unaccounted for are deeply troubling. The widespread harm to consumers and signals of institutional unfitness raise the possibility that Congress will take action to regulate the cryptocurrency industry. As Congress looks to reform the regulatory environment around cryptocurrencies, it is important that lawmakers provide regulatory clarity without hindering positive innovation.
Luke Hogg He is the policy director for the nonprofit Lincoln Network, where he focuses on the intersection of emerging technologies and public policy.