US lawmaker warns of ‘major consequences’ for users of unregulated crypto firms, citing FTX

Maxine Waters, chair of the United States House of Representatives Financial Services Committee, pushed for additional federal oversight of crypto trading platforms and consumer protection amid FTX facing liquidity issues.

In a Nov. 10 statement, Waters cited FTX’s difficulties as the latest example of incidents “involving the collapse of cryptocurrency companies” and how such events could potentially impact consumers in the United States. The committee chair pushed for legislation establishing a framework for crypto assets, highlighting her efforts with Financial Services Committee ranking member Patrick McHenry in a bill aimed at regulating stablecoins.

“Although FTX’s U.S.-facing company is reportedly operational, FTX’s FTT tokens are now worthless, and even worse, FTX.com customers are completely unable to access their funds,” said Waters — though blockchain data at the time of publication appeared to show FTX withdrawals have resumed. “Now more than ever, it is clear that there are major consequences when cryptocurrency entities operate without robust federal oversight and protections for customers.”

The stablecoin bill currently being negotiated between Republicans and Democrats in the House committee may still have a chance of being passed in 2022, according to at least one lawmaker. However, the leadership of the committee could flip starting in January depending on the outcome of the election results, for which votes are still being counted at the time of publication.

As of Nov. 10, it is still unclear whether Republicans or Democrats will have majority control of the House and Senate starting in January, but some reports suggest Democrats will maintain a majority in the Senate while Republicans will gain a slight majority in the House. Should that be the case, McHenry would likely become committee chair and assume a leading role in regulating digital assets beginning in 2023.

In addition to Chair Waters, the Wall Street Journal reported on Nov. 9 that the U.S. Department of Justice and the Securities and Exchange Commission were investigating FTX US, the separate business entity that FTX CEO Sam Bankman-Fried said was “not financially impacted” by FTX’s liquidity concerns. In Europe, European Union Parliament Economics Committee member Stefan Berger also cited the situation with FTX to push for additional regulation in the crypto space: “With a global [Markets in Crypto-Assets framework], the FTX crash would not have happened.”