FTX hearing leads lawmakers to debate crypto risks, regulation

Mr. McHenry added that he believes “in the promise of digital assets and those around the world building on blockchain technologies,” though some of his fellow committee members did not agree.

“My fear is that we’ll view Sam Bankman-Fried as just one big snake in a crypto garden of Eden. The fact is crypto is a garden of snakes,” said Rep. Brad Sherman, D-Calif., who also serves as chairman of the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets.

Mr. Bankman-Fried, the founder and former CEO of FTX, was set to testify before the committee, but Bahamian authorities arrested him Monday night after federal prosecutors in the Southern District of New York indicted him on eight criminal charges. John J. Ray III, the new CEO of FTX, testified as the sole witness before the committee.

Mr. Sherman also urged his colleagues not to pass the Digital Commodities Consumer Protection Act. He said Mr. Bankman-Fried supported the bill because he wanted “to keep the SEC out of crypto.”

The bill, which leaders of the Senate Agriculture Committee introduced in August, would give the Commodity Futures Trading Commission the authority to regulate the trading of digital assets that act as commodities, such as cryptocurrencies bitcoin and ether. CFTC Chairman Rostin Behnam expressed his support for the DCCPA earlier this month when testifying before the Senate Agriculture Committee, which held its own hearing on the FTX collapse.