The collapse of the FTX Derivatives Exchange has placed all regulators on the edge and White House Press Secretary Karine Jean-Pierre said the Biden administration is monitoring the development surrounding the trading platform and the broader digital currency ecosystem.
“The administration has consistently maintained that without proper oversight cryptocurrencies risk harming everyday Americans,” White House Press Secretary Karine Jean-Pierre said during today’s White House press briefing. “The most recent news further underscores these concerns and highlights why prudent regulation of cryptocurrencies is indeed needed.”
FTX suspended withdrawals on its platform earlier this week, and though there were indications that the exchange resumed some trading activities on Thursday, that does not mean the exchange is out of the winds yet.
FTX’s fall from grace was a very concerning event for most stakeholders in the industry considering the firm maintained a healthy disposition all year round even when the crypto winter was blaring hot. The exchange positioned itself as the lender of last resort to distressed crypto lenders including BlockFi and Voyager Digital.
Things imploded for the exchange with the $500 million bailout from Alameda Research. As detailed by sources close to the matter, FTX’s Chief Executive Officer Sam Bankman-Fried transferred as much as $4 billion including customer’s funds from the trading platform to prop up the trading outfit.
The whole revelation was brought out when Coindesk published details of the assets on Alameda’s balance sheet earlier this month with the figures showing more FTT tokens. Binance was initially posited as the savior for the trading platform, however, the bigger rival bailed out of the proposed deal when its due diligence showed that FTX had more trouble than can be resolved.
Bankman-Fried has called on its investors to come to its aid, admitting that he “f*cked up.”
FTX Implosion: White House and the Next Course of Action
While Jean-Pierre admitted that more prudent regulation is needed to govern the industry, she did not specify in what exact regard this will be.
As the White House cannot comment on the active engagement by the United States Securities and Exchange Commission (SEC) and other independent regulators, she noted that the administration will continually monitor how the events shape up.
The Biden administration has been so focused on bringing a broad oversight on the digital currency ecosystem with the President issuing an Executive Order to that effect in March. The Executive Order requested US agencies to investigate cryptocurrencies and to put up a united front on how best to regulate the ecosystem.
While the current position is that the current financial and banking laws that apply to digital assets should be upheld for cryptocurrencies as well. Industry stakeholders have, however, demanded that lawmakers bring a fresh set of laws to give better guidance to existing and incoming players in the space.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
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