WASHINGTON, DC – In case you missed it: Yesterday at a Senate Agriculture Committee hearing titled “Digital Asset Review: Risks, Regulation and Innovation”, US Senator Sherrod Brown (D-OH) has expressed concern about the risks to consumers posed by volatile digital assets like those offered on Crypto.com. During the hearing, Brown pressed Kevin Werbach, Professor at the Wharton School of the University of Pennsylvania, and Sam Bankman Fried, founder and CEO of FTX, on how to regulate digital assets to protect consumers. As chairman of the Senate Committee on Banking, Housing, and Urban Affairs, Brown led efforts to regulate the field of digital assets.
“We hear a lot about innovation, but I fear that digital aids create big risks for consumers. The Banking and Housing Committee has been studying cryptocurrency for years and we will continue to ensure that consumers are protected in these markets,” Brown told the hearing.
During the hearing, Brown asked Mr. Werbach about the best way to incorporate digital assets within the framework of bank secrecy law and anti-money laundering.
“There are all kinds of illicit activities happening using digital assets, and there is a need to integrate this whole ecosystem into the frameworks we have established for illicit finance and find new technological means to achieve this”,said Mr. Werbach. “But at the end of the day, it comes down to the fundamental question that regulators need to exercise oversight. These must be exchanges and other entities subject to market regulators such as the CFTC and the SEC, which can determine how to implement these types of requirements, because there is no doubt. There are far too many financial crimes. There are also financial crimes outside of the crypto course, but far too much is happening with these assets.
Brown then asked Mr. Bankman-Fried whether companies like Crypto.com should get rich selling consumers a dangerous and risky product.
“There have been a number of hacks and scams; historically, most of this has happened on unregulated sites,” said Mr. Bankman-Fried. “There are really sophisticated tools available to the CFTC and other federal agencies to help mitigate this risk. The CFTC has a very comprehensive cybersecurity and anti-hacking department and program that all of its registrants follow. There has been a very good track record of these companies, I believe digital asset exchanges subject to this level of oversight would be entirely appropriate and would help mitigate the exact risks you are pointing out.
As chairman of the Senate Committee on Banking, Housing, and Urban Affairs, Brown led efforts to regulate the field of digital assets.