The crumbling of crypto exchange FTX and its subsequent bankruptcy filing has brought much negative attention for the crypto industry. However, that may be just the wake-up call U.S. lawmakers need, said Hester M. Peirce, a commissioner at the Securities and Exchange Commission (SEC).
Peirce, who joined CoinDesk TV “First Mover” just moments before Bahamas-based FTX announced that it had filed for Chapter 11 bankruptcy protection in the U.S., said that despite the dark moment for the industry, FTX’s downfall could be the “catalyst” government agencies needed to “sit down” and create clear regulations.
“That doesn’t mean just bringing enforcement actions,” Peirce said, “but we also need to know, thinking about this as a society, how do we want to regulate this thing.”
Peirce said the difficulties that come with regulating digital assets could be solved in a more productive and efficient manner if the SEC and the Commodities of Futures Trading Commission (CFTC) were to coordinate in some fashion. In the past, former CFTC Chairman Timothy Massad has voiced his support for a self-regulatory organization (SRO) overseen by both the CFTC and the SEC.
“Having the SEC and CFTC work together makes a lot of sense,” Peirce said. “And even before Congress acts, we can do a lot of work jointly and get input from the border public.”
Peirce did not state which agency should be responsible for regulating the crypto industry, and added that “having one regulator devoted to crypto could be problematic.” She did, however, suggest that crypto and the underlying blockchain technology that powers it could be “integrated into the back end of the financial system,” and therefore warrant the jurisdictions of the SEC.
“The SEC would be a good regulator for spot crypto markets if we got our act together,” Peirce said.
Friday morning, FTX Group, along with FTX.com, FTX US, Alameda Research and an estimated “130 affiliated companies,” filed for bankruptcy protection in the U.S. Meanwhile, the company’s CEO, Sam Bankman-Fried, said he would be stepping down.
In the midst of the debacle, Peirce said for crypto it’s a strong “reminder” for people to take into account some of the “basic lessons from traditional finance,” adding that things such as counterparty risks and who is in charge of handling a user’s assets is a “real thing.”
“This is not a great moment and it’s attracting a lot of negative attention,” Peirce said. “But at the same time, it can be a catalyst for us to sit down and do some of the regulatory work.”
Source: Coindesk
