CryptoLink - December 2022

This December issue of Crypto Link covers the significant developments surrounding FTX Trading Ltd. (FTX), including its bankruptcy filing and the charges against and arrest of its CEO, Samuel Bankman-Fried. In the midst of the parallel enforcement actions taken by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the United States Attorney’s Office for the Southern District of New York, Sam Bankman-Fried and his alleged illicit dealings have similarly sparked the interest of both the public and lawmakers. Although the mainstream and crypto-specific press suggest that current legislative efforts to solidify a crypto regulatory regime will be substantially set back because of the FTX bankruptcy, the exact opposite seems to be the case. Bipartisan and bicameral support for two broad crypto-related regulations – CFTC regulation of crypto spot markets (minimally for Bitcoin and Ethereum) and the federal regulation of stablecoins – remain largely intact. If anything, the FTX scandal seems to have only encouraged members of Congress and agency leadership in their effort to properly regulate digital assets in a manner that provides certainty to a growing industry and protection for consumers. Despite Congress’s efforts, SEC Chair Gary Gensler has emphasized that he and the SEC have all of the tools they need to get crypto under control, notwithstanding his apparent acknowledgement that legislation is necessary for stablecoins and Congress’s overall dissatisfaction with his “regulation by enforcement” approach. Those who are ‘crypto-hostile’ in Congress and the Administration remain so, and while emboldened by recent events, they will probably be on the ‘outside looking in’ at any serious legislative effort. It is not going too far to conclude that the coming year could be a “Crypto Congress,” with the stage set for establishing a meaningful and lasting legal and regulatory regime for the growing digital asset industry.