FTX filed for bankruptcy in November and Senator Patrick Toomey says Congress should move to provide regulatory clarity on crypto, adding that FTX’s collapse has nothing to do with cryptocurrency.
According to the lawmaker, cryptocurrency is software that has nothing instrinsically good or evil about it.
He says the ‘code committed no crime’ and that the US cannot ban crypto as that only pushes it offshore.
US Senator Patrick “Pat” Toomey Jr., a crypto-friendly lawmaker who believes regulatory clarity can benefit the sector, says the FTX case is about the crimes committed by Sam Bankman-Fried and others, and that the saga has nothing to do with cryptocurrency or the underlying technology.
Toomey, who said in an interview with CNBC’s ‘Squawk Box’ on Tuesday that the indictment of the former FTX CEO should not be an indictment of crypto, maintains that the ‘code committed no crime.”
He was commenting on FTX’s implosion following a House Committee hearing.
“The wrongful behaviour that occurred here is not specific to the underlying asset. What appears to have happened here is the complete breakdown in the handling of those assets,” he said.
‘Nothing intrinsically good or evil about software’
According to Senator Toomey, handling of the saga going forward should not involve calls to ban crypto altogether until regulations are in place. Indeed, his view is that FTX would not have happened if Congress had moved to offer the regulatory guidelines necessary to promote the ecosystem and help robust, well-regulated US-based exchanges take root.
That hasn’t happened, and it’s important to note that there’s a difference between crypto as the underlying software and the companies built on top of it – like FTX. He added:
“There’s nothing intrinsically good or evil about software…it’s about what people do with it. And with this analogy in mind, what we should all understand here is one simple thing – the code committed no crime. FTX and cryptocurrency are not the same thing.”
No one banned mortgages after 2008
The lawmaker also stated that it’s the FTX founder and his team that were ‘opaque’ and dishonest. Not the crypto.
He referenced the 2008 financial crisis, noting that no one moved to ban mortgages following the crisis, nor the US dollar when certain individuals mismanaged customer funds. Likewise, it would be inconceivable for people to suggest a ban on crypto – as the problem is clearly FTX and the misuse of customer funds.
Pause crypto! Toomey says ‘no way’, and that would only succeed in pushing the industry offshore.
“Short of enacting draconian, authoritarian policies, cryptocurrency cannot be stopped. If we try, the technology will simply migrate offshore. Cryptocurrency does not need brick and mortar facilities to operate.”
To help streamline the crypto sector and have properly regulated American crypto exchanges, he points to Congress.
The collapse of FTX is not an indictment of crypto. It’s an indictment of those who misused customer assets.
As I’ve said for months, Congress needs to give regulatory clarity so business flows to prudent, sensible, well-regulated American crypto exchanges. pic.twitter.com/oXKZdawO0m
— Senator Pat Toomey (@SenToomey) December 14, 2022
Senator Toomey’s remarks on Wednesday come after Bankman-Fried’s arrest in the Bahamas. The former FTX CEO faces several criminal charges from the US Department of Justice, US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
As reported earlier, new FTX CEO John J Ray III believes what happened at FTX is ‘old-fashioned embezzlement.’
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