The current collapse of cryptocurrency company FTX has exposed another festering problem with how the industry is being regulated, says CEI Senior Fellow John Berlau:
“FTX and its associates should be held accountable with all the laws against fraud and deception already on the books that apply. Gary Gensler’s SEC should also be faulted for focusing on woke agenda items such as ESG mandates for public companies, while apparently neglecting its core function of investor protection from fraud and deception. It should drop its pending regulations such as climate disclosure rule that do little to address investors’ needs, and rededicate its time and resources to investigating and punishing true investor fraud.
“We need the right kind of regulation for cryptocurrency, which in some case means updating laws and in some cases means lowering the barriers to safer alternatives for investors who want exposure to the crypto sector. The SEC, for instance, has blocked nearly all crypto-based exchange-traded funds, even though these come with built-in investor protection and reduce risks of holding individual cryptocurrencies through venues such as FTX. Outdated rules also deter the holding of crypto in bank and trust accounts, where assets have much more protection under the law than in trading venue, and those should be revised.
“What we don’t need is unfocused regulation that resembles the Sarbanes-Oxley Act that was rushed through after the Enron scandal that doesn’t tackle the problem and curtails opportunity for honest entrepreneurs and middle-class consumers and investors. The decentralization and privacy from cryptocurrency and blockchain offers untold benefits to Americans, and regulators should not be allowed to rob Americans of these benefits because of the misdeeds of miscreants in this sector.”