NEW YORK, Dec 1 (Reuters Breakingviews) – A congressional grilling on cryptocurrency answered a lot of questions, but far more about the ignorance on Capitol Hill than digital currencies. The U.S. Senate Agriculture Committee on Thursday held the first public hearing since Sam Bankman-Fried’s FTX collapsed last month, kicking off Washington’s broader effort to beef up regulation of the industry. It hardly inspired confidence about the ability of lawmakers to protect investors.
Rostin Behnam, chairman of the U.S. Commodity Futures Trading Commission, was the only one to testify. Many of the queries lobbed his way fell far beyond his remit. Democrat Dick Durbin, from Illinois, wanted to know how long it would take “to unpack the FTX mess” while Alabama Republican Tommy Tuberville asked who was responsible for overseeing environmental, social and governance ratings. More bizarrely, Roger Marshall, also a Republican, suggested a “pause in this cryptocurrency digital world” while Congress gets its “arms around it,” a process he said could take years. Crypto’s decentralized nature would make it all but impossible to halt trading and only make it more dangerous.
Marshall, who also raised concerns around how cryptocurrencies play a role in cyberattacks and drug trafficking, was at least more on point by calling for stronger oversight and condemning usage in illegal activities. For the time being, however, the CFTC lacks authority over the crypto space. Security tokens, which represent a stake in another asset or business, fall under the U.S. Securities and Exchange Commission’s purview. Cryptocurrencies like bitcoin and its ilk, however, still exist in a regulatory gray area.
Marshall also referenced central bank digital currencies, but those will fall under the U.S. Federal Reserve’s purview if the central bank approves such a project. And its backing of digital dollars would theoretically give them a similarly stable value as printed cash.
The jurisdictional aspects will be hard enough to untangle before even getting to the complexity involved with the currencies themselves. Bitcoin has been around for more than a decade, however, and Congress has failed to craft relevant laws to oversee crypto. Although more hearings on the subject are planned, lawmakers laid bare how flummoxed they are about modern technology, just as they did on issues such as social media. It leaves elected officials with another steep learning curve to climb to make sure the industry doesn’t just slip its own proposed rules by them.
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CONTEXT NEWS
The U.S. Senate Committee on Agriculture, Nutrition, and Forestry on Dec. 1 held a hearing to probe the collapse of cryptocurrency exchange FTX. Rostin Behnam, chairman of the Commodity Futures Trading Commission, was the one to testify.
The hearing was the first of several planned to examine FTX’s bankruptcy, cryptocurrency regulation, and agency jurisdiction over digital assets.
Committee Chair Debbie Stabenow of Michigan, a Democrat, and ranking member John Boozman of Arkansas, a Republican, introduced legislation in August that aims to give the CFTC jurisdiction over the digital commodities spot market.
Editing by Jeffrey Goldfarb and Amanda Gomez
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