On Thursday, lawmakers will question a top U.S. financial regulator about the spectacular fall of cryptocurrency exchange FTX and whether more could have been done to stop it.
In the first of several hearings in Congress to look into what went wrong with FTX, members of the Senate Agriculture Committee are likely to ask Rostin Behnam, chairman of the Commodity Futures Trading Commission, if the chaos could have been avoided with better oversight.
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The hearing, called “Lessons Learned From the FTX Collapse and the Need for Congressional Action,” will start at 10 a.m. Eastern Time (1500 GMT).
The committee that watches over the CFTC could also ask Behnam about meetings between the commodities regulator and FTX staff, including founder Sam Bankman-Fried. Behnam said Monday at a Financial Times event that the CFTC and FTX had “many meetings” about FTX’s request to directly clear customer trades. After FTX filed for bankruptcy, the plan was scrapped.
The CFTC declined to comment. Sen. Debbie Stabenow, who is a Democrat and chairs the Senate Agriculture Committee, and Sen. John Boozman, who is a Republican and is the committee’s ranking member, did not respond right away to a request for comment.
On November 11, FTX filed for bankruptcy, and Bankman-Fried stepped down as CEO. This happened after traders took $6 billion out of the platform and a rival exchange, Binance, backed out of a deal to save it.
Behnam has asked lawmakers before for more power to help the CFTC regulate digital assets. Still, he said on Monday, clearer rules might not have been enough to save FTX.
The CFTC is in charge of markets for derivatives, which are usually dominated by big players like money managers. It has the power to stop fraud and other bad behavior, but it can’t regulate spot markets.
Regulators are also fighting over who should be in charge of keeping an eye on the cryptocurrency market. Many people on the Senate Agriculture Committee have agreed with Behnam in the past that the CFTC should do more.
But the U.S. Securities and Exchange Commission knows more about how to watch over markets where individual investors take part. Gary Gensler, the head of the SEC, has said that he thinks his agency will be the main regulator because most crypto tokens are securities.
Thursday’s hearing could be the first chance to see if the FTX scandal has made lawmakers change their minds about how to set up a framework for regulating cryptocurrencies.
This month, Congress will hold more hearings to talk about what went wrong with FTX. The House Financial Services Committee will hold the first of a series of hearings on Dec. 13.
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The committee has said that it wants to hear from Bankman-Fried, FTX, and Alameda Research, which is a trading firm that works with FTX.