Sherrod Brown: US Senator Sherrod Brown recently suggested that US federal agencies should consider banning cryptocurrencies.
He especially alluded to the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
During an NBC’s “Meet the Press” session, Brown acknowledged that while he made the ban suggestions, he also acknowledged it would be “very difficult.”
The US senator cited that the crypto industry could go offshore.
He also referred to several regulators based in the United States, saying:
“We want them to do what they need to do at the same time – maybe banning it.”
“Although banning it is very difficult because it will go offshore and who knows how that will work.”
Sherrod Brown highlighted several incidents to back his claims, including “the threat to national security from Korean cyber criminals to drug trafficking and human trafficking and financing of terrorism and all things that can come out of crypto.”
The FTX collapse was also a prime example.
The FTX collapse
In early November, crypto exchange FTX collapsed and filed for bankruptcy.
The company announced it was filing for Chapter 11 bankruptcy to start a process to review and monetize assets.
Sister company and trading firm Alameda Research also filed for bankruptcy.
However, other conglomerates weren’t part of the filing, such as:
- Ledger X LLC
- FTX Digital Markets Ltd.
- FTX Australia Pty Ltd.
- FTX Express Pay Ltd.
The announcement included confirmation that founder Sam Bankman-Fried stepped down as the CEO.
John J. Ray III took over and said:
“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process.”
Sam Bankman-Fried was considered a celebrity in the crypto space, but he lost his status almost overnight.
Binance started selling its FTT (FTX’s native exchange token) token holdings, holding it as part of an equity exit from the firm last year.
When the token plummeted, investors started withdrawing their funds from the FTX, prompting the platform to pause withdrawals and citing panic.
Earlier this month, Sherrod Brown called for a collaborative approach from different government bodies about reeling crypto.
He released a statement saying, “Single regulatory agencies currently generally do not have a comprehensive view of crypto asset entities’ activities.”
Brown has held a Democratic seat in Ohio since 2007, and he isn’t the only senior figure in the US government calling for stricter crypto regulation.
Senator Elizabeth Warren revealed a new bill earlier this month that governs cryptocurrencies.
The bill is titled the Digital Asset Anti-Money Laundering Act.
It strives to force crypto asset providers to offer audited financial statements.
Additionally, the bill seeks to impose bank-like capital requirements that align with what’s expected from traditional financial institutions.
Finally, the bill would give the SEC increased powers to regulate the asset class.
Offshore crypto movement
Contrary to the US Senator’s statement, the uncertain regulatory future in the United States is already prompting the crypto industry to move operations offshore.
In November, Coinbase CEO Brian Armstrong addressed the situation, tweeting:
“FTX.com was an offshore exchange not regulated by the SEC.”
“The problem is that the SEC failed to create regulatory clarity here in the US,” he continued.
“So many American investors (and 95% of trading activity) went offshore.”
Armstrong also noted that the situation of the punishment on US companies made no sense.”
After FTX’s collapse, Brian Armstrong shared his desire for US lawmakers to step up and lead the global race to crypto regulation.
He said Coinbase has been a strong advocate for the regulation of cryptocurrencies, contrasting the approach of his platform with Bahamian-based “offshore exchange.”