PALM SPRINGS, Calif. (AP) — The conviction of former cryptocurrency mogul Sam Bankman-Fried for embezzling at least $10 billion from customers and investors has further tarnished the reputation of the cryptocurrency industry. Surprisingly, there appears to be little interest in Washington to promote regulatory measures.
During the collapse of cryptocurrencies and the failure of several companies last year, Congress explored various approaches to regulate the industry. However, most of these efforts have been fruitless, amidst a chaotic year dominated by geopolitical tensions, inflation, and the upcoming 2024 election.
Ironically, the downfall of Bankman-Fried’s FTX and his subsequent arrest may have contributed to the stagnation of regulatory momentum. Bankman-Fried, using illegally acquired funds from his customers, spent millions of dollars to influence the cryptocurrency regulation debate in Washington.
In the absence of congressional action, federal regulators like the Securities and Exchange Commission (SEC) have taken matters into their own hands, initiating enforcement actions against major crypto exchanges such as Coinbase and Binance. In the latest development, PayPal has received a subpoena from the SEC related to its PayPal USD stablecoin.
Despite these actions, Congress remains inactive. Senators Debbie Stabenow and John Boozman proposed last year to transfer regulatory authority over cryptocurrencies like bitcoin and ether to the Commodities Futures Trading Commission. However, Senator Sherrod Brown, the Chair of the Senate Banking Committee, has been highly skeptical of cryptocurrencies and reluctant to support them through regulation.
In the House, a bill aimed at regulating stablecoins passed the House Financial Services Committee, but has received no attention from the White House or the Senate.
President Joe Biden signed an executive order last year urging the Federal Reserve to explore the creation of a digital currency. However, no progress has been made on that front.
Consumer advocates question the need for new regulations, arguing that existing securities and commodities laws are sufficient to address fraudulent activities in the crypto industry.
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Hussein reported from Lewiston, Maine
