US Senator Calls for Comprehensive Crypto Regulation to Protect Consumers

“The cryptocurrency industry has collapsed,” the senator stated, noting that $1.46 trillion was lost in crypto market value by 2022, and that over 1,600 jobs have been eliminated by crypto firms. The lawmaker went on:

Last year saw crypto prices plummet, and platforms started collapsing, causing more losses for the rest of crypto ecosystem. Crypto firms left behind have had to stop customer withdrawals and freeze people’s money.

The senator from Ohio noted that crypto contagion didn’t infect the wider financial system. However, he said that he saw signs of what it could do if crypto was allowed to enter the banking system. He said: “This nightmare isn’t over yet… we are still learning about the full extent of what happened to the FTX collapse.”

The senator noted that “As these cryptocurrency firms filed for bankruptcy”, regulators and policymakers also learned how out of control some of those businesses were.

They were both over-leveraged, and undercapitalized. They did not have internal risk controls. They took customers’ money for granted. They used the money to fund their own personal ends in the case of FTX. They might never see the money again.

“These crypto disasters have exposed what many people already knew: digital assets – stablecoins and investment tokens- are speculative products run recklessly by companies that put Americans’ hard-earned dollars at risk. It is not surprising that this industry was designed to skirt the rules,” Senator Brown added.

Recent crypto meltdowns have shown that we need a comprehensive framework for regulating crypto products in order to protect consumers as well as our financial system.

The lawmaker pointed out that crypto can be covered by existing rules, and stated that: “Crypto isn’t unique… We can begin with these commonsense principle as we consider a regulatory framework that places consumers first while keeping our financial system safe.”

Senator Brown has been skeptical of cryptocurrency for a long time. He suggested in December 2013 that crypto should be banned. He acknowledged, however, that it would be difficult to ban crypto as it will move offshore.