US Congressman Brad Sherman believes that FTX executives are one of the reasons why crypto regulation has been slow in the US.
Brad Sherman, who is highly skeptical toward cryptocurrencies, believes that among many other reasons, FTX CEOs are one of the main reasons why crypto regulation in the US has halted and not progressed in the last few months.
In a recent statement from Sherman, after FTX crashed and its users lost millions of dollars worth of cryptocurrency, Brad Sherman stated that immediate regulation is necessary to prevent further damage to the US economy.
He stated that FTX’s collapse is just a “demonstration” of how risky cryptocurrencies are to the US economy.
He also publicly positioned against cryptocurrencies and continued to label them as a threat to society.
The US Congressman referred to FTX CEOs as “billionaire crypto bros”. He stated that their unlawful dollars were used during the US electoral campaigns. Hence, he called SEC and other legal entities to intervene and regulate the crypto industry immediately.
Sam Bankman-Fried, FTX’s CEO, gave donations to the Democratic Party during the presidential elections. On the other hand, Ryan Salame, co-CEO of FTX, had donated to the Republican Party. Both CEOs had also donated around $40 million to both parties during the US midterm elections. Hence, FTX became the sixth largest political contributor.
Because of these political contributions, US regulators have recently halted more regulations given that it would affect FTX as one of the largest contributors. However, now with the FTX controversy, many are starting to question the means of administration from Biden’s Democratic Party.
Others believe that while some regulation should be in place to prevent similar scandals as FTX from happening again, aggressive regulation is not necessarily the solution. Instead, regulators should aim for “common sense” regulations that would not greatly affect the crypto industry.
How Regulations Impact the Crypto Industry
It’s clear that regulations may limit crypt adoption as well as innovation in this industry. But, financial experts believe it is a must. The US Congress could potentially initiate the Stablecoin Transparency Act as a first step. This could impact several “big players” in the crypto industry.
As for investors, these regulations, as well as the FUD caused by FTX, have largely aggravated market sentiment. Because of that, large crypto investments are unlikely to happen in the coming days or even weeks. Moreover, many users are moving away from centralized exchange and are now storing their funds in cold wallets.
Some other bills considered by Congress are the Central Bank Digital Currency Study Act, Commodities Consumer Protection Act, Cryptocurrency Tax Clarity Act, etc.
Other bills could be proposed to emphasize consumer protection and facilitate stability in these markets. Given that bad actors such as FTX are getting filtered out of the system, regulations are likely to come, now more than ever. It’s uncertain how the community will welcome these regulations.