Former Senator Pat Toomey of Pennsylvania – who ended his congressional career in early January of this year when he chose not to run for another term – recently offered his thoughts on the crypto space and the fall of FTX.
Pat Toomey on FTX and Crypto
In the interview, Toomey said that if Congress had taken the time to implement appropriate crypto legislation and monitor the space, FTX likely never would have existed on the scale that it did. He said:
It’s not clear that FTX would have existed, at least at its scale, if we had domestic guidelines for American companies.
Despite this, he’s not necessarily a crypto regulation advocate, commenting:
The wrongful behavior that occurred here is not specific to the underlying asset. What appears to have happened here is a complete breakdown in the handling of those assets. I hope we [can] separate potentially illegal actions from perfectly lawful and innovative cryptocurrencies. To those who think that this episode justifies banning crypto, I’d ask you to think about several examples. The 2008 financial crisis involved misuse of products related to mortgages. Did we decide to ban mortgages? Of course not. A commodity brokerage firm run by former New Jersey Sen. Jon Corzine collapsed after customer funds, including U.S. dollars, were misappropriated to fill a shortfall from the firm’s trading losses. Nobody suggested that the problem was the U.S. dollar and that we should ban it. With FTX, the problem is not the instruments that were used. The problem was the misuse of customer funds, gross mismanagement, and likely illegal behavior.
He was asked if crypto investors need something in place to guarantee that they won’t lose their crypto investments granted outside parties decide to engage in illicit behavior. To that, Toomey replied:
If Congress had passed legislation to create a well-defined regulatory regime with sensible guardrails, we’d have multiple U.S. exchanges competing here under the full force of those laws… The complete indifference to an appropriate regulatory regime by both Congress and the [Securities and Exchange Commission] has probably contributed to the rise of operations like FTX. Congress can and should offer a sensible approach for the domestic regulation of these activities. This episode underscores the need for a sensible regulatory regime that, among other things, ensures a centralized exchange segregates and safeguards customer assets.
America Will Come Back
Despite everything that’s happened, he’s still confident that the American economy will remain resilient, and he thinks the country will return from the collapse. He said that America has a powerful habit of somehow coming back from the brink of disaster, and he doesn’t expect anything less:
I’m most optimistic about the incredible resiliency of the American economy. When I look around at the rest of the world, we wouldn’t want to change places with anyone for anything.
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