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US senators have urged Congress to regulate cryptocurrencies under current financial regulations after prosecutors charged FTX founder Sam Bankman-Fried with money laundering and other fraud.
There are differences of opinion on how the sector should be regulated; lawmakers basically agree that crypto businesses should be subject to greater regulation.
Critics claim that the cryptocurrency sector is filled with fraud and immorality, while supporters contend that this is just the consequence of a lack of regulations.
American prosecutors charged Sam Bankman-Fried, the founder of FTX, with various offences, including money laundering and fraud. The accusations marked the downfall of Bankman-Fried, who accumulated a fortune of more than $20 billion while leveraging the cryptocurrency boom to make FTX one of the biggest exchanges on the planet before it abruptly shut down this year.
“It is time for Congress to make the crypto industry follow the same money-laundering rules as everyone else,” U.S. Senator Elizabeth Warren said during a hearing of the key Senate Banking Committee.
The Banking Committee’s leading Republican Senator, Pat Toomey, branded the current AML technology “archaic” and said he didn’t think the money-laundering regulations were appropriate for cryptocurrencies.
Warren wants to give the authority of cryptocurrencies to the Securities and Exchange Commission (SEC). At the hearing, Republican Senator Cynthia Lummis announced her intention to propose a bill that would grant the Commodity Futures Trading Commission (CFTC) more jurisdiction. Critics of the CFTC are concerned that it will not be far enough to regulate the sector.
Toomey agreed that Washington is somewhat to blame for the demise of FTX when asked.
“The absence of legislation that creates the guardrails for regulation and the corresponding absence of any certainty has driven activity offshore to places like the Bahamas,” Toomey said. “That doesn’t always end well for American consumers and others.”
The witnesses at the hearing all were of the view that there is probably still more fraud to be uncovered in the cryptocurrency industry.
Hilary Allen, a committee witness and law professor at American University, warned that the value of cryptocurrency investments would vanish in without US regulations.“Whilst that is very bad news for the people who’ve already invested, I think it’s very good news for the rest of us because it’s been kept out of the broader financial system and we won’t suffer the consequences of its broader failure.”