Providing more regulatory clarity is the most important thing that can be done in order to attract crypto innovators to the US, FTX CEO Sam Bankman-Fried told senators.
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He was speaking during a hearing on digital assets in the US Senate’s Committee on Agriculture.
In the hearing, titled Examining Digital Assets: Risks, Regulation, and Innovation, Democratic Senator Debbie Stabenow, who serves as the Chairwoman of the Senate’s agriculture committee, noted that she believes the presence of unregulated offshore marketplaces for digital assets poses “unacceptable risks to consumers” in the US.
“Getting clarity on the cash cryptocurrency market […] would be really great for the industry,” Bankman-Fried responded, noting that a lot of institutional capital is waiting for just that to happen before they move into digital assets directly.
Additionally, the FTX CEO suggested that a registration process for digital tokens would be helpful for bringing activity back to the US.
“There is a lot of activity taking place outside the United States right now because there is not a clear registration process for tokens,” he said.
“We are in a situation where 95% of volume is offshore today, and it would be great to see a lot of that move back […],” Bankman-Fried added.
Commenting more directly on the benefits digital asset markets can bring to consumers, Bankman-Fried stressed how crypto markets, as opposed to traditional financial markets, offers “equitable access” for all.
For instance, he said that market data in the digital asset space is generally free and transparent for everyone to see, and all users are able to send orders directly to an exchange.
This differs from the situation in traditional financial markets, where most consumers can’t send their orders directly to the exchange’s matching engine. Instead, ordinary consumers have to rely on intermediaries which “add latency, increase fees and reduce transparency” in a way that results in “a less favorable market structure,” Bankman-Fried argued.
Meanwhile, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam, who also participated in the hearing, is seeking more authority and a bigger budget for the CFTC.
“We know market structure, we know surveillance, we know enforcement. We are a few steps ahead and ready to run with this if that is what this committee and Congress desires,” he said, adding that an increase of at least a USD 100m to the CFTC’s budget of about USD 300m could help them “to run with this.”
The hearing in the Senate’s Agriculture Committee on Thursday followed another hearing on stablecoin regulation in the US House of Representatives Financial Services Committee on Wednesday. The hearing revealed a sharp divide among lawmakers on how stablecoin issuers should be regulated.
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(Updated at 09:31 UTC with quotes from Rostin Behnam.)