Why FTX May Soon Be Facing Tougher Regulations

As FTX struggles with liquidity, Maxine Waters, chair of the US House of Representatives Financial Services Committee, pushed for increased federal regulation of cryptocurrency trading platforms and consumer protection.

In a statement on November 10th, Waters pointed to FTX’s problems as the most recent illustration of incidences. Like the collapse of cryptocurrency enterprises and how such occurrences might have an effect on American consumers. 

The committee’s chair promoted her partnership with Patrick McHenry, on a stablecoin regulatory bill. Also pushed for legislation to provide a framework for digital assets.

FTX’s U.S.-facing company is reportedly operating, but Waters claimed that the company’s FTT tokens are now worthless and that customers of FTX.com are unable to access their money at all.

However, at the time of publication, blockchain data appeared to show that FTX withdrawals have resumed. It is abundantly clear that operating crypto entities without strong federal oversight and customer protections has serious issues now.

According to at least one lawmaker, the stablecoin measure that is presently being discussed in a House committee by Republicans and Democrats may still have a chance of passing in 2022. 

But depending on the outcome of the election results—votes for which are still being tabulated as of the time of publication—the chairmanship of the committee might change starting in January.

FTX On Fire

As of November 10th, it was still unknown who would control the House and Senate with majorities beginning in January. However, some reports indicate that Democrats will keep control of the Senate while Republicans pick up a small majority in the House. 

In that case, McHenry would probably take over as committee chair and play a key role in regulating digital assets starting in 2023.

Related Reading | Galaxy Partners With TradFi Giant To Launch Bitcoin ETF In Brazil

In addition, The Wall Street Journal said on Nov 9 that, in addition to chair Waters, the SEC and the U.S. Department of Justice were looking into FTX US. The distinct company that CEO Sam Bankman-Fried of FTX claimed was “not financially harmed” by liquidity issues.

Stefan Berger, the EU Parliament member, used the FTX incident as justification for further regulation of the crypto industry. He said that if there had been a global framework for markets in crypto-assets, the FTX fall would not have occurred.

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