Industry Needs to Take Initiative in Lobbying Lawmakers

While there are a number of crypto advocates cautioning against a knee-jerk legislative response to the FTX debacle, Congress is still a potentially hostile hotbed in the coming session. Speaking after the Monday arrest of FTX founder Sam Bankman-Fried, some lawmakers say FTX is not a one-off.

“My fear is that we’ll view Sam Bankman-Fried as just one big snake in a crypto Garden of Eden. The fact is, crypto is a garden of snakes,” said Rep. Brad Sherman, a California Democrat, at a hearing of the House Financial Services Committee.

Sherman, one of the many critics of crypto in Congress, made his statement at a hearing where SBF was originally scheduled to appear. SBF is accused of stealing from customers and lying to investors about using deposits to bankroll his Alameda hedge fund, leading to a $32 billion collapse.

His counterpart, Rep. Patrick McHenry, R-NC, who will head the Financial Services Committee in the next Congress, promised Tuesday to call US Securities and Exchange Commission Chair Gary Gensler “early and often.”

On CoinDesk TV, Kristin Smith, executive director of the Blockchain Association, said the industry needs to put in extra effort working with Congress to ensure regulatory reform and clarity.

Smith said on CoinDesk TV’s “All About Bitcoin” program on Monday that the industry can “get beyond this current crisis.” What is needed is to work with a “bipartisan set of policymakers who are interested in finding the right regulatory framework” for crypto, not only to protect consumers but to drive innovation.

 “We're going to see a number of bipartisan legislative proposals that are put forth that are going to be very much vetted and debated by multiple committees in Congress, and that we really could see some momentum around getting some legislation done,” Smith said.

“What we don’t want them doing is rushing through legislation that hasn’t been vetted or that nobody understands,” Smith said. She said now is the time for lawmakers to ask questions to get to the bottom of what happened at FTX, especially what happened to the customer funds that were lost in the shuffle.

Politicians could also think twice about taking donations from primarily crypto-based platforms, according to Smith.