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FTX collapse to be focus of Senate hearing Thursday — here’s what to watch for

The collapse of the crypto exchange FTX will be the subject of a hearing in Congress this week — one of what’s likely to be many public inquiries into what went wrong at the entity founded by Sam Bankman-Fried.

The Senate Agriculture Committee will hold a hearing Thursday at 10 a.m. featuring testimony from Rostin Behnam, chair of the Commodity Futures Trading Commission. The panel is headed by Sen. Debbie Stabenow, a Michigan Democrat, who has co-sponsored legislation that would give Behnam’s agency regulatory power over the crypto industry. Sen. John Boozman of Arkansas, the agriculture committee’s top Republican, is also a sponsor.

Bankman-Fried, who has resigned from FTX, was a supporter of the legislation. Thursday’s hearing “will be crucial to assessing the future of this legislation and whether it still has the similar, strong bipartisan support it did prior to the recent crisis,” Beacon Policy Advisors wrote in a note on Monday,

From the archives (June 2022): New crypto bill could give CFTC another boost in its quest to regulate digital assets

Behnam, the CFTC chair, “has been supportive of the bill and [of] increasing his agency’s authority previously, so we doubt that his tune will be any different on Thursday,” Beacon said.

Thursday’s scheduled Senate hearing, titled “Why Congress needs to act: Lessons learned from the FTX collapse,” is one of at least two hearings focused on the downfall of FTX. House Financial Services Committee Chair Maxine Waters, a California Democrat, and the panel’s top Republican, Rep. Patrick McHenry of North Carolina, have announced that they plan to hold a hearing in December to look at “the collapse of FTX and the broader consequences for the digital asset ecosystem.” The House committee has said it “expects to hear from the companies and individuals involved, including Sam Bankman-Fried, Alameda Research, Binance, FTX, and related entities, among others.”

Separately, Democratic Sens. Elizabeth Warren and Dick Durbin are demanding that Bankman-Fried hand over documents that will shed light on the collapse of his crypto exchange, including copies of balance sheets at the exchange and its subsidiaries.

FTX’s bankruptcy has hit an already battered crypto market, sending bitcoin
BTCUSD,
-2.45%

prices to a two-year low. The cryptocurrency is trading at around $16,168 on Monday, down more than 65% year to date.

In addition to FTX, a number of major players in crypto have collapsed this year, including blockchain Terra, hedge fund Three Arrows, broker lender Celsius, and most recently BlockFi. Earlier this year, FTX extended a $400 million credit facility to BlockFi, with an option to acquire the digital-asset lender for $240 million.

It’s unclear whether Bankman-Fried will testify at the House hearing or any other such hearings. Last week, however, he tweeted that he would be interviewed at a New York Times conference on Wednesday.

Bankman-Fried’s desire to have the CFTC oversee crypto is the subject of a Washington Post article published Monday, which notes that some consumer advocates who have called for regulation oppose the Stabenow bill. Those advocates, the Post reports, say the CFTC is too lenient and is less prepared than the Securities and Exchange Commission to oversee the burgeoning realm of digital currencies.

SEC chair Gary Gensler earlier this month described the bill as “too light touch.”

Frances Yue contributed to this article.

Also read: ‘Is there anything about crypto that is as it seems?’ FTX failure threatens industry’s reputation in D.C.



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