• Former Senator Pat Toomey of Pennsylvania recently discussed the fall of FTX, and why he believes appropriate crypto legislation and monitoring the space could have prevented it.
• He doesn’t see banning crypto as a solution, citing examples such as the 2008 financial crisis and Jon Corzine’s mismanagement of customer funds.
• He believes that Congress should create a well-defined regulatory regime with sensible guardrails to protect investors from losing their crypto investments.
Former Senator Pat Toomey on the Future of Crypto
Former Senator Pat Toomey of Pennsylvania – who ended his congressional career in early January of this year when he chose not to run for another term – recently offered his thoughts on the crypto space and the fall of FTX.
Pat Toomey on FTX and Crypto
In the interview, Toomey said that if Congress had taken the time to implement appropriate crypto legislation and monitor the space, FTX likely never would have existed on the scale that it did. He said: It’s not clear that FTX would have existed, at least at its scale, if we had domestic guidelines for American companies.
Despite this, he’s not necessarily a crypto regulation advocate, commenting: The wrongful behavior that occurred here is not specific to the underlying asset. What appears to have happened here is a complete breakdown in the handling of those assets. I hope we [can] separate potentially illegal actions from perfectly lawful and innovative cryptocurrencies.
Banning Crypto Not Necessary
To those who think that this episode justifies banning crypto, Toomey replied: If Congress had passed legislation to create a well-defined regulatory regime with sensible guardrails, we’d have multiple U.S. exchanges competing here under the full force of those laws… The complete indifference to an appropriate regulatory regime by both Congress and the [Securities and Exchange Commission] has probably contributed to the rise of operations like FTX.
Protecting Investors from Illicit Behavior
He was asked if crypto investors need something in place to guarantee that they won’t lose their crypto investments granted outside parties decide to engage in illicit behavior. To that, Toomey replied: Congress can and should offer a sensible approach for the domestic regulation of these activities. This episode underscores the need for a sensible regulatory regime that, among other things, ensures a centralized exchange where customers can buy or sell digital assets without fear.
It’s clear from former Senator Pat Toomey’s comments about cryptocurrency regulation that there needs to be more oversight into how cryptocurrencies are handled by exchanges so investors don’t suffer losses due to bad actors or mismanagement.