Senator Toomey: Crypto Cannot Be Stopped

United States Senator Pat Toomey this week spoke at the Senate Banking Committee hearing on the collapse of FTX in which he explained that the illegal actions by FTX must be separated “from perfectly lawful and innovative cryptocurrencies.”

Senator Pat Toomey (R-PA) emphasized that “The collapse of FTX is not an indictment of crypto,” adding that “cryptocurrency cannot be stopped” and “the technology would simply migrate offshore” if Congress tried to do something untoward against the industry. Toomey described the events:

There was unauthorized lending of customer assets to an affiliated entity, and there were fraudulent promises to investors and customers about FTX’s operations. These are outrageous and completely unacceptable.

He further emphasized:

I want to underscore a bigger issue here: The wrongful behaviour that occurred here is not specific to the underlying asset. What appears to have happened here is a complete breakdown in the handling of those assets.

Senator Toomey made a crucial statement that Congress and regulators need to keep in mind:

Cryptocurrencies are actually software. What we should all understand here is one simple thing: The code committed no crime. FTX and cryptocurrencies are not the same thing. FTX was opaque, centralized, and dishonest. Cryptocurrencies are open-source, decentralized, and transparent.

The fallout from FTX Does Not Justify and Ban on Crypto

Toomey also addressed suggestions that have been put forward which sat crypto should be banned:

To those who think that this episode justifies banning crypto, I’d ask you to think about several examples. The 2008 financial crisis involved the misuse of products related to mortgages. Did we decide to ban mortgages? Of course not. A commodity brokerage firm run by former New Jersey Senator John Corzine collapsed after customer funds — including U.S. dollars — were misappropriated to fill a shortfall from the firm’s trading losses. Nobody suggested that the problem was the U.S. dollar and that we should ban it. With FTX, the problem is not the instruments that were used. The problem was the misuse of customer funds, gross mismanagement, and likely illegal behaviour.

To his colleagues who have suggested that crypto should be paused before addressing it, he had the following to say:

Some of my colleagues have suggested pausing cryptocurrencies before we can address it. This is profoundly misguided, not to mention impossible. Short of enacting draconian, authoritarian policies, cryptocurrency cannot be stopped. If we tried, the technology would simply migrate offshore.

He further opined:

Are we going to decide to pause our Constitution to stop crypto? This is exactly the kind of mindset that has driven this activity to the dark and less regulated parts of the world.

Would it Be Wise for Congress Not to Regulate the industry?

Toomey further said in his statements:

Others have suggested we refrain from addressing cryptocurrency at all, so as to not legitimize its use. This is not only misguided, it’s irresponsible.

He stressed:

Individuals can also be tremendously empowered when they use cryptocurrencies. They can protect against inflation when governments irresponsibly manage their own currencies. They can provide useful services without the need for a company or middleman. And they can let individuals preserve the freedom to transact privately.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.