US guards are to blame for the fall of FTX

An unpleasant break followed the questions of a legislator at a hearing this week when they asked the supervisory authorities which authority was responsible for monitoring the failed cryptocurrency exchange FTX.

"Can you tell me who monitored FTX in our federal financial service state to ensure that nobody stole people's money there?" Asked John Kennedy, a Republican senator from Louisiana, the banking supervisory authorities during a hearing in the Senate. "Has anyone looked at that?"

After the collapse of the 32-billion dollar empire by Sam Bankman-Fried, to which a large US subsidiary also belonged, legislators and supervisory authorities in Washington tried to blame each other for FTX slipped through the grid.

"There is definitely a game of guilt and we will see more of it," said Ian Katz, financial policy analyst at the independent market research company Capital Alpha Partners.

Janet Yellen, US Finance Minister, was one of the officials who pointed out supervisory deficiencies. The case of FTX "show the need for a more effective supervision of the markets for cryptocurrencies," she said on Wednesday in an explanation and added that the same protective measures that are offered in traditional markets should also apply to crypto-assets.

But the top banking supervisory authorities of the country - including the leading supervisory authorities of the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Currency - deviated and argued that the legislator's questions should be addressed instead such as the Securities and Exchange Commission. Commission.

Market intercuptions are "the first point of contact in this area," said Michael Barr, the deputy chairman of the FED for supervision, on Tuesday in front of members of the Senate banking committee. "You have existing authorities [and] We want to ensure that they are fully utilized."

Critics of the SEC, whose chairman Gary Gensler once described the cryptomarkt as the "wild west", argued that the authority focused on headlining assets such as the accusation against the famous businesswoman Kim Kardashian because it illegally advertised for crypto instead of systemically risking on the market. You also said Gensler should clarify the rules for digital assets.

The chairman of the SEC has argued that the existing securities laws are sufficiently clear and has repeatedly asked cryptoplate forms to register with the agency, based on the assumption that most tokens are considered securities.

Gensler said to CNBC last week: "[Crypto] is an area that is significantly not compliant, but there are regulations and these regulations are often very clear." He also asked Congress to give the SEC more powers to monitor crypto.

Katherine Martin, managing director of Rock Creek Global Advisors, a political consultancy company, agreed: "You cannot rely on the fact that the SEC solves this problem alone, unless the agency receives a new mandate from legislation and resources to implement it."

like Gensler, Rostin Behnam, the chairman of the CFTC, has also argued that the existing laws are clear. He also supported a non-partisan bill, which was introduced by the US senators Kirsten Gillibrand and Cynthia Lummis and which would expand the authority of the CFTC and give it the responsibility for crypto bargain markets based on the premise that most tokens are similar. (There is still no final classification of tokens.)

When asked whether regulatory authorities and the entire industry were too easy to do by Bankman-Fried this week at a conference in Chicago, Behnam said: "We always have to question ourselves to learn.. But from my point of view I did what I could do with my authority."

he added that the regulatory authorities could "prevent" similar events in the future if the congress would act quickly to give them more powers.

ledgerx, a CFTC-regulated appointment exchange that was bought by FTX last year, was not included in the bankruptcy applications of the past week. Behnam and CFTC commissioner Kristin Johnson both referred to the survival of Ledgerx as proof of the effectiveness of the supervision by the Commission.

The banking supervisory authorities also took criticism from some legislators, partly because they had not given the banks detailed instructions on working with crypto companies and the provision of services such as the custody of assets. Others complained that they were simply too easy.

"I am worried about what I heard from you, gentlemen: 'Corrids, safe and solid ways to deal with crypto'," said Brad Sherman, a Democratic MP from California, to the banking supervisory authorities who were present at the hearing of the Financial Service Committee of the House of Representatives on Wednesday. "You sound like Sam Bankman-Fried, only you wear long trousers instead of shorts."

The debate shows weaknesses in a complex regulatory network.

"We have three different bank supervisory authorities, two different market view authorities, ambiguities and sometimes restrictions on the area of ​​responsibility," said Kathryn Judge, legal professor at Columbia University. "Part of what the entire fiasco reflects is the fact that such a fragmented regulatory system causes running costs."

The majority of the FTX units were not registered with US authorities because the main exchange on the Bahamas is regulated where it is headquartered. FTX.US, the US counterpart of the platform, was not regulated by the SEC or the CFTC.

Right-wing experts argue that it could have been within the area of ​​responsibility if assets that were traded on the platform were classified as securities or raw materials or if FTX.US will forward orders from US investors to the FTX based on the Bahamas and thus acted as a broker.

Analysts argue that the inactivity of legislation is also responsible for an incomplete regulatory crypto framework in the United States. While the legislator has introduced crypto calculations-including one that supported Bankman-Fried-none has so far been adopted.

, according to Aaron Klein, former deputy deputy secretary for economic policy in the Ministry of Finance, "all laws that were designed before FTX's implosion must be fundamentally covered".