The United States Might Need to Ban Crypto, Says Banking Committee Chief

U.S. Senator and chairman of the Senate Banking Committee, Sherrod Brown (D-OH), spoke on Sunday about what actions regulators need to take after the implosion of FTX. 

He suggested that crypto may be something that “ought to be banned” if not for the risk of sending the industry offshore. 

Banning Crypto

Speaking with NBC’s Chuck Todd on Meet the Press, Brown agreed that Sam Bankman-Fried – FTX’s former and disgraced boss – used political favor and donations to create an illusion of credibility around himself, presenting a flaw within the current political system. 

However, he claimed the FTX collapse represents just one large part of the dangers of crypto, which includes Ponzi schemes, poor consumer protections, and national security threats. Among those threats are “Korean cybercriminals,” “drug trafficking,” “human trafficking,” and terrorist financing. 

Brown said he’d already asked the secretary of the Treasury to conduct a government-wide assessment of crypto involving various regulatory agencies. He noted that the Securities and Exchange Commission (SEC) has been particularly aggressive, but that legislative action may also be necessary. 

“I’ve spent much of the last year and a half in this job… trying to educate the public about crypto and the dangers that it presents to our security as a nation, and to consumers that get hoodwinked by it,” he said. 

Thus far, the Biden administration has agreed to take a regulatory approach to the crypto industry, pursuing “responsible innovation” as its top priority for the space. Despite his doubts over much of the industry, Federal Reserve chairman Jerome Powell has clarified that he has “no intention to ban” crypto. 

Todd asked Brown if he thought the regulatory approach may be giving an inappropriate green light to a technology that ought to be banned entirely. 

“I share that thought,” said Brown, stressing the need for agencies to unite on getting crypto under control. 

“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,” he said. 

Sending Crypto Abroad

Crypto’s flag bearers frequently note the dangers of sending crypto abroad when speaking against overly strict and imposing regulations. Coinbase CEO Brian Armstrong thinks this is primarily what allowed the FTX fraud to grow to such a substantial size. 

“We should continue to work with policymakers to create sensible regulation for centralized exchanges/custodians in each market (as we’ve been doing for some time), but then we need to see a level playing field enforced, which hasn’t happened to date,” he said in November.

Binance, which operates overseas, is currently the largest crypto exchange in the world by trading volume. Concerns about Binance’s opaque operations have inflated over the past month, especially after its proof of reserves partner called it quits after releasing its first report on the exchange’s Bitcoin holdings.

Featured Image Courtesy of Politico