US Senator Calls for Comprehensive Crypto Regulation to Protect Consumers

The chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Sherrod Brown, has called for a comprehensive regulatory framework for cryptocurrencies. “Recent crypto meltdowns have made clear that we need a comprehensive framework to regulate crypto products to protect consumers and our financial system,” said the senator.

U.S. Senator Sherrod Brown (D-OH), chairman of the Senate Committee on Banking, Housing, and Urban Affairs, talked about crypto regulation Tuesday in his opening statement at the congressional hearing titled “Crypto Crash: Why Financial Safeguards are Needed for Digital Assets.”

“The cryptocurrency industry has imploded,” the senator began, noting that the crypto market lost $1.46 trillion in value in 2022 and crypto firms have slashed over 1,600 jobs. The lawmaker detailed:

As crypto values crashed last year, platforms began collapsing, creating more losses across the rest of the crypto ecosystem. The crypto firms that are left have had to halt customer withdrawals, freezing people out of their own money.

While noting that crypto contagion did not infect the broader financial system, the senator from Ohio said: “We saw glimpses of the damage it could have done if crypto migrated into the banking system.” He warned: “This nightmare isn’t over yet … We are still learning the full extent of the fallout from the FTX collapse.”

Noting that “As these crypto firms filed for bankruptcy, regulators, and policymakers have also learned how out-of-control some of those businesses were,” the senator emphasized:

They were over-leveraged and undercapitalized. They had no internal risk controls. They were careless with customers’ money. In the case of FTX, they used it to line their own pockets. Now the money of millions of Americans is trapped and they might never get it back.

“These crypto catastrophes have exposed what many of us already knew: digital assets — cryptocurrencies, stablecoins, and investment tokens — are speculative products run by reckless companies that put Americans’ hard-earned money at risk. Not surprising from an industry that was created to skirt the rules,” Senator Brown further opined, adding:

Recent crypto meltdowns have made clear that we need a comprehensive framework to regulate crypto products to protect consumers and our financial system.

The lawmaker noted that existing rules can apply to crypto, stating: “Crypto isn’t special … We can start with these commonsense principles as we consider a regulatory framework for digital assets that puts consumers first and keeps our financial system safe.”

Senator Brown has long been skeptical about cryptocurrency. In December last year, he suggested that crypto should “maybe” be banned. However, he acknowledged that it is very difficult to ban crypto because it will go offshore.

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