Kevin Helms
A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of economics and cryptography.
Cryptocurrency Can’t Be Stopped, FTX Collapse Is Not An Indictment Against Crypto – Regulation Bitcoin News
US Senator Pat Toomey says illegal actions by crypto exchange FTX must be separated “from perfectly legal and innovative cryptocurrencies.” Emphasizing that “the collapse of FTX is not an indictment of crypto,” he noted that “cryptocurrency cannot be stopped” and “the technology would simply migrate offshore” if Congress tried.
Distinguish Illegal Actions from “Perfectly Legal and Innovative Cryptocurrencies”
US Senator Pat Toomey (R-PA) explained in his opening statement during the Senate Banking Committee hearing on Wednesday that the collapse of the crypto exchange FTX is not an indictment of cryptocurrency.
“There was unauthorized lending of customer funds to an affiliated entity, and there were false promises to investors and customers about FTX’s business. These are outrageous and completely unacceptable,” the senator described, stressing:
I want to emphasize a larger issue here: The misbehavior that occurred here is not specific to the underlying asset. What seems to have happened here is a complete breakdown in the management of these assets.
“In our discussion about FTX today, I hope we are able to separate potentially illegal actions from completely legal and innovative cryptocurrencies,” he told the Senate committee.
Noting that cryptocurrencies “are actually software,” Senator Toomey said: “What we should all understand here is one simple thing: The code did not commit a crime. FTX and cryptocurrencies are not the same thing. FTX was opaque, centralized and dishonest. Cryptocurrencies are open source, decentralized and transparent.”
Should FTX Fallout justify banning or “pausing” crypto?
The Pennsylvania senator went on to address suggestions that crypto should be banned following the FTX meltdown.
“To those who believe that this episode justifies banning crypto, I would ask you to think of more examples,” he began. “The financial crisis in 2008 involved the misuse of products linked to mortgages. Have we decided to ban mortgages? Of course not. A commodities brokerage firm run by former New Jersey Senator John Corzine collapsed after client funds – including US dollars – were misused to fill a shortfall from the firm’s trading losses. No one suggested that the problem was the US dollar and that we should ban it.” Senator Toomey emphasized: “With FTX, the problem is not the instruments that were used. The problem was misuse of client funds, gross mismanagement and probably illegal conduct.”
The legislator continued:
Some of my colleagues have suggested pausing cryptocurrencies until we can resolve it. This is deeply misunderstood, not to mention impossible. Short of adopting draconian, authoritarian policies, cryptocurrency cannot be stopped. If we tried, the technology would simply migrate offshore.
“Should we decide to pause our constitution to stop crypto? This is exactly the kind of mindset that has driven this activity to the dark and less regulated parts of the world,” he continued.
Should Congress refrain from regulating crypto?
Moreover, the lawmaker said: “Others have suggested that we refrain from addressing cryptocurrency at all, so as not to legitimize its use. This is not only misunderstood, it is irresponsible.”
The senator elaborated: “Individuals can also be enormously empowered when using cryptocurrencies. They can protect against inflation when governments irresponsibly manage their own currencies. They can offer useful services without the need for a company or intermediary. And they can allow individuals to preserve the freedom to act privately.”
Toomey also tweeted Wednesday:
The collapse of FTX is not an indictment of crypto. It is an indictment against those who misused customer funds.
“As I’ve been saying for months, Congress needs to provide regulatory clarity so business flows to sound, sane, well-regulated US crypto exchanges,” he added.
What do you think of Senator Pat Toomey’s comments about FTX and cryptocurrency? Let us know in the comments section below.
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