Citing the FTX implosion, U.S. lawmakers on Tuesday expressed concern about the risks posed to retail investors and the wider financial system, and stepped up calls for tougher oversight of cryptocurrencies during a hearing. with the main banking regulators in the country.
“This should be another call for Congress to seriously examine crypto exchanges and lending platforms, many of which engage in risky behaviors, while portraying themselves as safe to consumers,” Bob Menendez told colleagues. , the Democratic senator from New Jersey. and banking regulators, which included Federal Reserve Vice Chairman for Oversight Michael Barr and Acting Chief Comptroller of the Currency Michael Hsu.
Cynthia Lummis – the Republican senator from Wyoming, who co-authored a bipartisan bill that outlines a comprehensive regulatory framework for digital assets in the US – described the FTX turbulence as “horrible and at the same time not so surprising” .
“Obviously Congress needs to regulate digital assets,” she added.
Patrick Toomey, the committee’s top Republican, slammed regulators for focusing on issues he says are outside their mandate, including climate-related financial risks, and in turn failing to provide the guidance necessary for banks on crypto activities.
“While some of our banking regulators have been distracted, they have failed to address the real challenges facing the financial system,” he said. “The ambivalence of the remaining agencies has helped push crypto business into foreign jurisdictions with weaker or non-existent regulatory regimes.”
On Tuesday, Barr warned of the potential for “systemic risk” if “linkages develop” between the crypto system and more traditional corners of finance.
“When regulation is lax or lagging behind, it can facilitate risk-taking and a race to the bottom that endangers consumers, businesses and the economy and discredits new products and services with consumers and investors” , did he declare.