Senate Banking chair warns crypto could 'crash our financial system' following FTX collapse

Quick Take

  • The chair of the Senate Banking Committee is sounding the alarm on crypto following FTX’s collapse. 

Senate Banking Committee Chair Sherrod Brown, D-Ohio, is sounding the alarm on crypto following FTX's collapse. 

“This year we’ve seen cryptocurrency values collapse by $2 trillion. 2,000 billion dollars,” Brown said at the opening of a hearing with top U.S. banking regulators. "The parallels to past financial crises throughout our history are troubling.”

“We’ve seen them used for speculation and fraud, scams, sanctions evasion, outright theft – there doesn’t seem to be anything beneficial or useful that hundreds of speculative cryptocurrencies can be used for,” Brown continued, noting the partisan split on the industry's reception. “Many on my side of the aisle have raised warning flags about this. The last thing we need is for risky new financial products to crash our financial system. Thank you those of you on the panel for your skepticism about cryptocurrencies.”

Brown has been critical of the industry in the past, but cast today's remarks in the context of the recent collapse of FTX. 

Brown's Republican counterpart, Sen. Pat Toomey, R-Penn., pushed back on this sentiment in his line of questioning.

“The insinuation was that they might have the ability to crash our financial system,” Toomey said. "It’s fundamentally not about the kind of assets held at FTX, it’s about what individuals did with those assets.” 

Toomey drew a comparison to MF Global's bankruptcy. “Nobody suggested that the problem was the instruments that were used. The problem was the use of customer funds.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.