The cryptocurrency industry came under fire from U.S. lawmakers during a meeting of the Senate Banking, Housing, and Urban Affairs Committee on Tuesday titled “Crypto Crash: Why Financial System Backups Are Necessary for Digital Assets.”
See related article: Be careful what you wish for? Regulators Accelerate Pace of Crypto Industry Crackdown
Fast facts
- “While the crypto contagion did not infect the wider financial system, we did see glimpses of the damage it could have caused had crypto migrated into the banking system,” the committee chair said. , Senator Sherrod Brown, in his opening speech, referring to the collapse of the Bahamas. crypto exchange based on FTX.com in November.
- “These crypto disasters revealed what many of us already knew: digital assets – cryptocurrencies, stablecoins and investment tokens – are speculative commodities run by reckless companies that put the world at risk. Americans’ hard-earned money,” he said.
- The hearing covered topics ranging from stablecoin regulation to consumer protection and how the Securities and Exchange Commission (SEC) should cooperate with the Commodity Futures Trading Commission to regulate digital assets.
- Lee Reiners, director of policy at the Duke Financial Economics Center, said crypto undermines US national security and no longer looks much like what pseudonymous Bitcoin creator Satoshi Nakamoto envisioned when he developed the technology.
- Others took a more positive stance, such as Senator JD Vance, who warned regulators not to “destroy the positive dynamics of the digital asset world.”
- Senator Tim Scott has called on Securities and Exchange Commission (SEC) Chairman Gary Gensler to appear before Congress to address enforcement actions taken by the agency in recent weeks.
- On Thursday, crypto exchange Kraken shut down its crypto staking program and paid a US$30 million fine after the SEC said the program violated securities law.
- Shortly after, Paxos Trust Company stopped minting the Binance USD (BUSD) stablecoin, which has a collateral of US$16 billion, under orders from the New York Department of Financial Services.
- Hearings also follow white house calls to redouble efforts to regulate the growing industry, who warned that it would be a “serious mistake” to enact legislation that would deepen the ties between crypto and traditional finance due to the risk of wider financial contagion in case of crisis.
See related article: Hold On To Your Crypto Bags, Regulators Are Coming