Members of the Senate Banking Committee listened to both crypto aficionados and evangelists during a hearing set for Valentine's Day in an effort to comprehend the recent "crypto meltdown" while promoting new, stricter regulatory measures to protect American consumers. This follows a spate of missteps that have dogged the cryptocurrency sector over the past year, beginning with the Terra (LUNA) fiasco.
Senators Are Alarmed by the Crypto Crash
The hearing occurs at a pivotal time for the cryptocurrency business, which is now dealing with a number of scandals, fraud, shocking arrests, global manhunts, hacks, exploits, intrusive marketing, and even age-old embezzlement tactics. Major financial regulatory agencies, like the SEC, NYDFS, and Justice Department, have frequently waded into cryptocurrency businesses to punish or outright prevent them from continuing to operate.
In his opening statement, Ranking Member Tim Scott hinted at the accusations brought against Kraken and Paxos and stated that the committee needs to hear directly from SEC Chair Gary Gensler in order to comprehend the most recent regulatory actions taken by the financial watchdog. Sen. Sherrod Brown (D-Ohio), chairman of the committee, reaffirmed the concerns that governments and central banks voiced 10 years prior: bitcoin can be used for unlawful activities like drug and human trafficking and can result in dishonest behavior.
In his introductory remarks, Brown is quoted as having said:
"Contrary to crypto evangelists’ claims of democratizing finance, it’s not the early adopters are the big money investors left holding the bag when it comes to crypto."
“It turns out fortune doesn’t favor the brave. It favors wealthy insiders. It’s not just about a few bad actors that didn’t do things quite the right way. These crypto catastrophes have exposed what many of us already knew about digital assets, cryptocurrency, and stablecoins."
Concerns voiced regarding the SEC
Government officials investigated the needs and benefits of developing a regulatory framework for the cryptocurrency industry in order to safeguard savers and investors. They did this with the help of three witnesses.
However, not everyone agreed that adding more crypto laws is the best way to solve the issues the crypto sector is now facing. Senator Tim Scott (R-South Carolina) asserted that FTX and other companies could already be subject to enforcement action by the federal government.
He asserts that, despite the Securities and Exchange Commission's (SEC) prior notification that cryptocurrency companies must abide by current laws, it is equally crucial for the authorities to “enforce existing regulations and to conduct appropriate, effective supervision.”