FTX failure may strengthen case for more robust crypto regulation

Gensler criticized legislation introduced this year by Senate Agriculture Chairwoman Debbie Stabenow, D-Mich., and ranking member John Boozman, R-Ark., that aims to better regulate cryptocurrency by giving the Commodity Futures Trading Commission authority over some of the largest digital commodities, including bitcoin.

Gensler said in an address to the Healthy Markets Association on Wednesday that the legislation was promoted by “the same folks that failed in the last day or two,” referring to FTX and Bankman-Fried, who had encouraged passage of the bill. “And you sort of wonder why,” Gensler said. “Because it was too light touch.” 

Other lawmakers say the SEC should share some of the blame.

“Congress’ failure to pass legislation creating regulatory guardrails for crypto trading, combined with the complete hostility and lack of transparency by @SEC.gov, has generated a debilitating amount of legal uncertainty,” Senate Banking ranking member Patrick J. Toomey, R-Pa., tweeted.

A pullout and a plummet

Crypto news site CoinDesk reported last week that Alameda Research, a trading firm founded by Bankman-Fried, was more financially bound to FTX than previously disclosed, after the site reviewed a private financial document. The report contradicted earlier assurances by Bankman-Fried that there were strict barriers between Alameda and FTX.