Bankman-Fried’s court case revealed fraudulent activity in the crypto industry, but Congress has shown little interest in implementing regulations for the sector.

Sam Bankman-Fried, a former leader in the cryptocurrency world, has been found guilty of taking over $10 billion from those who trusted him. This is just one more example of the tarnished reputation of the cryptocurrency industry. However, in the nation’s capital, there appears to be little desire to enact regulations to prevent such incidents.

Last year, when the value of cryptocurrencies dropped and several businesses went bankrupt, Congress discussed various strategies for regulating the industry in the future. However, many of these attempts have not made progress, particularly in this tumultuous year marked by global conflicts, rising prices, and the impending 2024 election.

Interestingly, the downfall of Bankman-Fried’s FTX and his subsequent detainment in late 2020 may have hindered the progress of regulation. Prior to the collapse of FTX, Bankman-Fried unlawfully used millions of dollars from his clients to sway the conversation surrounding cryptocurrency regulation in Washington and advocate for governmental intervention.

In the absence of Congress, government agencies such as the Securities and Exchange Commission have taken on the responsibility of enforcing regulations on the industry. This has led to the initiation of lawsuits against major cryptocurrency exchanges Coinbase and Binance.

PayPal disclosed in a securities filing on Wednesday that it has received a subpoena from the SEC regarding its PayPal USD stablecoin. The company stated that the subpoena asks for the submission of documents and that they are working with the SEC to comply with the request.

However, Congress has not taken any action yet.

Senator Debbie Stabenow, a Democrat from Michigan, and Senator John Boozman, a Republican from Arkansas, suggested in 2020 that the Commodities Futures Trading Commission take over the regulation of cryptocurrencies like bitcoin and ether. Stabenow and Boozman are the heads of the Senate Agriculture Committee, which has jurisdiction over the CTFC.

A major obstacle in the Senate has been Senator Sherrod Brown, a Democrat from Ohio and the chair of the Senate Banking Committee.

Brown has expressed doubts about the validity of cryptocurrencies and has been hesitant to endorse them through government regulation. He has organized multiple hearings within his committee to discuss various concerns surrounding cryptocurrencies, such as their potential harm to consumers and involvement in illegal activities, but has not proposed any legislation for consideration.

In a statement following Bankman-Fried’s conviction, Brown expressed concern over the ongoing financial losses suffered by Americans due to crypto scams and frauds. Brown emphasized the need for stricter measures to prevent abuse and underscored the importance of not allowing the crypto industry to set its own regulations.

The House of Representatives passed a bill over the summer that aims to regulate stablecoins, which are cryptocurrencies backed by tangible assets such as the U.S. dollar. However, this bill has not received any attention from the White House or the Senate.

Last year, President Joe Biden issued a directive regarding the supervision of cryptocurrency by the government. This order encouraged the Federal Reserve to investigate the possibility of developing its own digital currency. Despite this, there have been no developments in this area thus far.

Doubts have been expressed by consumer advocates regarding the necessity of implementing new regulations.

Dennis Kelleher, the president of Better Markets, a non-profit organization focused on creating a secure financial system for all Americans, stated that there is no necessity for specific cryptocurrency laws that would only serve to validate an industry utilized by speculators, financial predators, and criminals.

He stated that the crypto industry is subject to securities and commodities laws, just like any other compliant financial institution in the nation.

According to Bartlett Collins Naylor, a financial policy advocate for Public Citizen’s Congress Watch, the laws regarding fraud and securities are currently effective.

On the other hand, supporters of cryptocurrency are prompt to mention that it was Bankman-Fried who was on trial, and not the entire sector.

Sheila Warren, CEO of the Crypto Council for Innovation, stated that according to the jury’s decision, a small group of people were guilty of committing fraud. She also mentioned that it is important for the U.S. to have clear regulations in the digital asset industry, although this is not directly related to the trial. This has been a focus for policymakers even before the trial and it will continue to be a priority moving forward.


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Hussein provided coverage from Lewiston, Maine about…