The FTX collapse is going to go down as one of the biggest flops to ever occur in crypto. The event has caused several politicians to enter the regulatory call factory, one of which is Joe Biden.
Joe Biden Wants the Crypto Space Regulated
Thinking he can somehow make a difference, Biden recently voiced support for newfound digital currency regulation to ensure that what happened with FTX never happens again.
Biden initially sought to get the ball rolling on such a proposition in March of this year when he issued a crypto executive order for financial agencies throughout the United States to begin researching digital currency platforms to see what the benefits and disadvantages could be for everyday Americans and financial systems. The order also opened the door to a digital version of USD.
Now, it looks like several world leaders are getting involved, with many speakers at the recent G20 Summit calling for more regulation of crypto. The G20 leaders issued the following joint statement:
It is critical to build public awareness of risks, to strengthen regulatory outcomes, and to support a level playing field, while harnessing the benefits of innovation.
In October, the Financial Stability Board (FSB) suggested new rules that would subject the crypto space to the same financial rules one often witnesses in the world of banks and standard monetization. These leaders supported such ideas, claiming:
We welcome the FSB’s proposed approach for establishing a comprehensive international framework for the regulation of crypto asset activities based on the principle of ‘same activity, same risk, same regulation.’ The crypto assets ecosystem, including so-called [traditional currency-pegged] stable coins, is closely monitored and [should be] subject to robust regulation, supervision, and oversight to mitigate potential risks to financial stability.
One of the big problems that occurred with FTX is that the head honcho behind it, Sam Bankman-Fried, may have taken user funds and lent them out to his second company Alameda Research. This put the FTX exchange in a dark place and caused it to fall $8 billion in debt.
Cristiano Bellavitis – a Syracuse University professor specializing in crypto and blockchain technology – recently mentioned:
This is a wake-up call, rather than just a bump in the road, or even the end of the road. The sector is huge financially but has very limited regulation. The same problems would not have occurred in the mainstream financial system.
Things Will Fix Themselves
Despite all the trouble, he is confident that the space is going to recover from all this in due time, though he doesn’t deny regulation could help. He said:
[The collapse of FTX] will diminish confidence in the crypto industry, but this industry and blockchain technology [are] here to stay. More regulation and clearer rules will only strengthen what this industry can do.