Lawmakers Continue to Quarrel Over ‘Crypto Nightmare’

Lawmakers and experts met in Washington, D.C. today to discuss how to better regulate the fast-moving and complex world of cryptocurrency—but didn’t really come up with any solid solutions.

The Senate Banking Housing and Urban Affairs Committee hosted a meeting Tuesday titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets,” where some experts said it would be best to let the industry flourish and allow innovation. 

But others were more hostile towards crypto and warned of the risks the digital asset world poses to traditional finance. 

“This crypto nightmare isn’t over yet—we’re still learning the full extent of the fallout of the FTX collapse,” Sherrod Brown (D-Ohio) said in his opening remarks, urging strict regulation after the fall of mega exchange FTX last year. 

FTX’s bankruptcy last year has effectively vaporized billions of dollars of customers’ cash. 

The Bahamas-based company went bust because it used client money to make risky investment bets through trading firm Alameda Research, prosecutors allege—and its ex-boss and co-founder is now facing eight criminal charges. 

FTX’s spectacular collapse has prompted lawmakers and experts to try and figure out how to regulate the industry more than ever—but for different reasons. 

At today’s hearing, long-time crypto critic Sen. Elizabeth Warren (D-Mass.) spoke about how criminals such as “drug kingpins” used digital assets. 

Lee Reiners, policy director of the Duke Financial Economics Center, said that the crypto world barely resembled anything Bitcoin creator Satoshi Nakamoto envisioned and “undermined” U.S. national security. 

“14 years have provided ample evidence of the dire harm cryptocurrency inflicts on our society,” he said. 

Others urged regulation but stressed that the technology should be allowed to grow. Georgetown Law professor Linda Jeng said that crypto could have helped her move her savings abroad had she known how to use the right apps. 

And Senator J.D. Vance (R-Ohio)—who admitted to owning crypto—said regulators want to make sure they don’t “destroy the dynamic upside” of the digital asset world. 

Regulators have taken a tougher stance towards crypto recently: the SEC hit American crypto exchange Kraken with a $30 million fine last week for violating securities laws. 

SEC chair Gary Gensler wasn’t present at today’s meeting, and lawmakers noted that the top regulator should attend the committee’s next hearing.