How Cryptos Meltdown Changed the Regulatory Debate

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It’s harder to pretend your parents should leave you alone when you just broke the car. As digital assets lost over $2 trillion in value and a series of top companies exploded in 2022, including the FTX exchange, the debate over cryptocurrency regulation has changed dramatically. The turmoil also raised the stakes in a battle already brewing in Congress over which of the nation’s top market regulators, the Securities and Exchange Commission or the Commodity Futures Trading Commission, should take the lead in crypto oversight. . Separately, the SEC has made it clear that it considers most digital assets to be securities, a designation that comes with a comprehensive set of requirements, while top US banking regulators have issued a sweeping statement on dangers of cryptography.

The collapse of FTX and the criminal fraud charges filed against its co-founder, Sam Bankman-Fried, have caused widespread embarrassment in Congress and among regulators. He and several other top FTX executives had made major campaign donations to Democrats and Republicans and played leading roles in an effort to craft a new regulatory regime that reflected the priorities of some members of the crypto community. While regulators have pointed to the fact that the crypto woes have not destabilized traditional financial markets, they have been criticized for failing to take steps to prevent the worst abuses in the industry.

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