Crypto Leaders Blame Lack Of Clarity Of US Regulations for FTX Incident

Crypto Leaders Blame Lack Of Clarity Of US Regulations for FTX Incident.

FTX’s incident will have far-reaching consequences in the year of crypto contagions, as industry leaders point the finger at a lack of regulation in the U.S.

The lack of clarity on regulations

There were millions of people who lost money in crypto trading this week due to the collapse of FTX, the world’s second-largest centralized crypto exchange.

A raging anti-crypto senator, Senator Elizabeth Warren, slammed the crypto industry on Twitter for what she called a lot of smoke and mirrors.

“The collapse of one of the largest crypto platforms shows how much of the industry appears to be smoke and mirrors. We need more aggressive enforcement and I’m going to keep pushing @SECGov to enforce the law to protect consumers and financial stability,” he wrote on Twitter.

Read More: Sam Bankman-Fried Not Giving Up On FTX Through Leaked Slack Message 

The collapse of one of the largest crypto platforms shows how much of the industry appears to be smoke and mirrors. We need more aggressive enforcement and I'm going to keep pushing @SECGov to enforce the law to protect consumers and financial stability.https://t.co/uOPi8MV25J

— Elizabeth Warren (@SenWarren) November 10, 2022

Coinbase’s CEO Brian Armstrong responded by pointing out that FTX dot com was an offshore exchange that wasn’t regulated by the SEC.

“http://FTX.com was an offshore exchange not regulated by the SEC. The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore. Punishing US companies for this makes no sense,” he said.

The reason behind most crypto trading is offshore

Brad Garlinghouse, CEO of Ripple commented on Armstrong’s post, saying “Brian is right — to protect consumers, we need regulatory guidance for companies that ensures trust and transparency. There’s a reason why most crypto trading is offshore – companies have 0 guidance on how to comply here in the US.”

@SenWarren, Brian is right — to protect consumers, we need regulatory guidance for companies that ensures trust and transparency. There's a reason why most crypto trading is offshore – companies have 0 guidance on how to comply here in the US. 1/2

— Brad Garlinghouse (@bgarlinghouse) November 10, 2022

Read More: Galaxy Digital Disclose Approximately $76.8 Million Exposure to FTX

He compared it with Singapore that has a licensing framework, a token taxonomy, and a whole host of other things that allow them to regulate crypto appropriately because they know what “good” looks like, and that all tokens aren’t securities (despite Chair Gensler’s insistence on that).

Vishal K. Gupta, Head of Coinbase exchange noted that despite the U.S. crypto market only representing less than 5% of the total market by volume, there aren’t clear and fair regulations that have pushed crypto trading offshore.

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