Crypto-currencies are here to stay! Don’t be fooled by the FTX collapse!

U.S. Senator Pat Toomey says illegal shares of crypto-currency exchange FTX must be separated “From perfectly legal and innovative crypto-currencies.“Emphasizing that “FTX’s collapse is not an indictment of crypto-currencies“, he noted that “crypto-currencies cannot be stopped” and that “the technology would simply migrate abroad“if Congress tried.

Separate illegal actions from “perfectly legal and innovative crypto-currencies“.

U.S. Senator Pat Toomey explained in his opening statement at the Senate Banking Committee hearing on Wednesday that the collapse of the FTX crypto-currency exchange is not an indictment of crypto-currencies.

“There were unauthorized loans of customer assets to an affiliated entity, and there were fraudulent promises to investors and customers regarding FTX operations. These facts are outrageous and totally unacceptable“, the senator described, noting:

I want to highlight a more important issue here: The misconduct that occurred here is not specific to the underlying asset. What appears to have occurred here is a complete breakdown in the management of these assets.

“In our discussion of FTX today, I hope we are able to separate potentially illegal actions from perfectly legal and innovative cryptocurrencies” he told the Senate committee.

Noting that crypto-currencies “are in fact software“, Senator Pat Toomey explained, “What we all need to understand here is one simple thing: the code committed no crime. FTX and crypto-currencies are not the same thing. FTX was opaque, centralized and dishonest. Crypto-currencies are open-source, decentralized and transparent.“

Should the FTX fallout justify banning or “pausing” crypto-currencies?

Pennsylvania’s senator addressed suggestions for a ban on crypto-currencies following the FTX collapse.

“To those who think that this episode justifies the banning of crypto, I would ask you to consider several examples“, he began. “The 2008 financial crisis involved the misuse of mortgage-related products. Have we decided to ban mortgages? Of course not. A commodities brokerage firm run by former New Jersey Senator John Corzine collapsed after customer funds – including U.S. dollars – were diverted to make up a shortfall due to the firm’s trading losses. No one suggested that the problem was the U.S. dollar and that we should ban it“. Senator Toomey pointed out, “With FTX, the problem was not the instruments that were used. The problem was the misuse of customer funds, gross mismanagement, and probably illegal behavior.”

The legislature continues:

Some of my colleagues have suggested that we should pause crypto-currencies before we can address the issue. This is deeply misguided, if not impossible. Unless we enact draconian and authoritarian policies, crypto-currencies cannot be stopped. If we tried, the technology would simply migrate overseas.

“Are we going to decide to pause our Constitution to stop crypto-currencies? This is exactly the kind of mindset that has pushed this business to the darker, less regulated parts of the world“, he opined further.

Should Congress refrain from regulating crypto-currencies?

In addition, the legislature stated, “Others have suggested that we refrain from addressing crypto-currency at all, so as not to legitimize its use. This is not only misguided, it is irresponsible“.

The senator detailed, “Individuals can also have a tremendous amount of power when they use crypto-currencies. They can protect themselves from inflation when governments irresponsibly manage their own currencies. They can provide useful services without the need for a company or middleman. And they can allow individuals to preserve the freedom to make private transactions.“

Pat Toomey also tweeted on Wednesday:

FTX collapse is not an indictment of crypto. It’s an indictment of those who abused customer assets.

“As I’ve been saying for months, Congress needs to clarify regulations to ensure that U.S. crypto-currency exchanges are prudent, reasonable and well-regulated“, he added.