Inadequate Regulatory Approach Risks Another FTX Situation
Commodity Futures Trading Commission Chair Rostin Behnam has raised concerns about the possibility of another FTX-like event due to the inadequate regulatory approach in the crypto market. He emphasized the need for lawmakers to act swiftly to create guardrails and prevent risks, warning that failure to do so could make crypto unsafe for investors and lead to greater risks.
Behnam’s warning comes almost a year after he urged the Senate Banking Committee to address the regulatory gaps in the crypto market. At a recent conference at Georgetown University, Behnam reiterated that nothing has changed since his initial warning, leaving the market vulnerable to another FTX type event.
Former FTX CEO Sam Bankman-Fried’s recent conviction for defrauding investors and causing significant losses has further fueled distrust in the crypto market, prompting some in Congress to advocate for regulatory legislation.
Behnam acknowledged that the crypto market has evolved significantly, emphasizing the need for a regulatory roadmap to address its complexities and mitigate potential risks.
Congressional Action Needed
Behnam stressed the urgency for Congress to provide appropriate authority to regulate the digital commodity market effectively. He highlighted the importance of comprehensive regulation and emphasized that congressional action is essential to prevent future market disruptions.
Two bills related to crypto regulation have advanced out of the House Financial Services Committee, with one focusing on stablecoins and the other proposing a comprehensive regulatory framework for crypto. However, these bills still require full votes by both the House and Senate, presenting potential obstacles.
Behnam expressed concern that these bills appear to be in a “holding pattern,” indicating a lack of progress in addressing regulatory gaps in the crypto market.
Hot Take: Uphill Battle for Crypto Regulation
The lack of progress in enacting comprehensive regulatory measures poses significant challenges for addressing risks in the crypto market. Without swift congressional action, Behnam’s concerns about another FTX type event may become a reality, underscoring the need for urgent regulatory reforms.
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