Cryptocurrency Can’t Be Stopped, FTX Collapse Isn’t Indictment of Cryptocurrencies – Bitcoin News Regulation

US Senator Pat Toomey says the illegal actions of cryptocurrency exchange FTX must be separated “from perfectly legal and innovative cryptocurrencies”. Emphasizing that “FTX’s collapse is not an indictment of cryptocurrencies,” he noted that “cryptocurrency cannot be stopped” and “the technology would simply migrate offshore” if Congress tried.

Separating Illegal Stocks From “Perfectly Legal and Innovative Cryptocurrencies”

US Senator Pat Toomey (R-PA) explained in his opening statement at the Senate Banking Committee hearing on Wednesday that the collapse of cryptocurrency exchange FTX is not an indictment of the cryptocurrency.

“There has been an unauthorized lending of client assets to an affiliated entity and there have been fraudulent promises to investors and clients about FTX’s operations. These are outrageous and completely unacceptable,” the senator described, noting:

I want to point out a bigger issue here: the illicit behavior that occurred here is not specific to the underlying asset. What appears to have happened here is a complete failure in the handling of those assets.

“In our discussion on FTX today, I hope we will be able to separate potentially illegal stocks from perfectly legal and innovative cryptocurrencies,” he told the Senate committee.

Noting that cryptocurrencies “are actually software,” Senator Toomey explained, “What we should all understand here is one simple thing: the code hasn’t committed any crimes. FTX and cryptocurrencies are not the same thing. FTX was opaque, centralized and dishonest. Cryptocurrencies are open-source, decentralized, and transparent.”

Should the FTX Fallout justify banning or “pausing” cryptocurrencies?

The Pennsylvania Senator continued to suggest that the cryptocurrency should be banned after the FTX crash.

“To those who think this episode justifies banning cryptocurrencies, I ask you to think of several examples,” he began. “The 2008 financial crisis resulted in the misuse of mortgage-related products. Have we decided to ban mortgages? Obviously not. A commodities brokerage firm run by former New Jersey Senator John Corzine went bankrupt after client funds, including US dollars, were embezzled to make up a shortfall due to the firm’s trading losses. No one suggested that the US dollar was the problem and that we should ban it.” Senator Toomey stressed, “With FTX, the problem is not the tools that have been used. The problem was the misuse of client funds, the mismanagement and probable illegal behavior.

The lawmaker continued:

Some of my colleagues have suggested that we put crypto on hold before we can address this. This is deeply misleading, not to mention impossible. Short of implementing draconian and authoritarian policies, cryptocurrency cannot be stopped. If we tried, the technology would simply migrate offshore.

“Will we decide to pause our Constitution to stop cryptocurrencies? This is exactly the kind of mindset that has brought this business to the dark and less regulated parts of the world,” she further said.

Should Congress Refrain from Regulating Cryptocurrencies?

Further, the lawmaker said, “Others have suggested refraining from addressing cryptocurrency, so as not to legitimize its use. This is not only misleading, it is irresponsible.”

The Senator detailed, “Individuals can also be tremendously empowered when they use cryptocurrencies. They can protect themselves from inflation when governments handle their currencies irresponsibly. They can provide useful services without the need for a company or intermediary. And they can allow people to preserve the freedom to transact privately.”

Toomey also tweeted Wednesday:

The FTX crash is not an indictment of cryptocurrencies. It’s an indictment of those who have misused clients’ assets.

“As I have been saying for months, Congress must provide regulatory clarity so that business flows to prudent, reasonable and well-regulated American cryptocurrency exchanges,” he added.

What do you think of Senator Pat Toomey’s comments on FTX and cryptocurrency? Let us know in the comments section below.

Kevin Helms

An Austrian business student, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests are in Bitcoin security, open-source systems, network effects, and the intersection of economics and cryptography.

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