Nov 17, 2022 - Economy

Crypto industry licks wounds in D.C. following FTX collapse

Rep. Jake Auchincloss and Sen. Kirsten Gillibrand at the Blockchain Association Policy Summit. Photo: Brady Dale / Axios.

The debacle at bankrupt crypto exchange FTX threw a pall over The Blockchain Association's first policy summit in D.C., Wednesday, and that conflagration is complicating hopes that the industry could finally achieve clear updates to laws and rules in the U.S.

Why it matters: "Crypto's reputation in Washington has been damaged," the association's executive director, Kristin Smith, said during remarks at the event, while urging members to stay the course.

The big picture: Crises can be motivating for elected leaders, but they also might not want to do anything that appears to legitimize cryptocurrency right now.

What they're saying: Speakers on stage tried to make the case that a path forward from D.C. would be forthcoming, while acknowledging that FTX has clouded the conversation.

  • "It's one more exclamation point — I think we're all getting sick of exclamation points" Rep. Jake Auchincloss (D., Mass.) said in response to a question about FTX.
  • He partly blamed hostile regulations for driving activity overseas, but he also made the case the story isn't inherently one about crypto.
  • "The crimes FTX were committing were not whiz bang ... They were illegal 100 years ago," Auchincloss said.

Sen. Kirsten Gillibrand (D., N.Y.) also offered her hopes that some aspects of the cryptocurrency legislation she offered alongside Sen. Cynthia Lummis (R., Wyo.) could still advance.

  • "This bill is a baseline framework overarching all aspects of the industry," Gillibrand explained.
  • She said the Senate Agricultural, Nutrition and Forestry Committee was the most likely to pick up a piece of the bill.
  • Newly elected Majority Whip Rep. Tom Emmer (R., Minn.) also took to the stage to offer his support, unchanged from this summer.

Yes, but: It's a safe bet that every conversation about the blockchain in D.C. will turn into one about the disgraced exchange, especially because the former CEO had such a high profile in Washington in recent months.

  • "FTX and Sam himself have definitely been very vocal people," Rashan Colbert from the office of Sen. Cory Booker (D., NJ) said, "but that hasn't resulted in quite the hand-on-the-pen that I think a lot of people think it has."
  • Meanwhile, crypto's former boy wonder is characterizing all those efforts as political theater in a surprisingly candid interview over Twitter DM.

The bottom line: The House Financial Services Committee announced a December hearing on the subject this morning.

  • "I thought Gamestop would be the biggest hearing of this Congress, but I think this one will beat it," Tim Hite, from Rep. Warren Davidson's (R., Ohio) office, said on stage.
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