Senator Toomey: Crypto cannot be stopped

US Senator Pat Toomey this week spoke at the Senate Banking Committee hearing on the collapse of FTX, where he explained that the illegal actions of FTX must be separated “from perfectly legal and innovative cryptocurrencies.”

Senator Pat Toomey (R-PA) emphasized that “the collapse of FTX is not an indictment of crypto,” adding that “cryptocurrency cannot be stopped” and “the technology would simply migrate offshore” if Congress tried to do something untoward against the industry . Toomey described the events:

There was unauthorized lending of customer funds to an affiliated entity, and there were false promises to investors and customers about FTX’s operations. These are outrageous and completely unacceptable.

He further emphasized:

I want to emphasize a larger issue here: The misbehavior that occurred here is not specific to the underlying asset. What seems to have happened here is a complete breakdown in the management of these assets.

Senator Toomey made a crucial statement that Congress and regulators need to keep in mind:

Cryptocurrencies are actually software. What we should all understand here is one simple thing: The code committed no crime. FTX and cryptocurrencies are not the same. FTX was opaque, centralized and dishonest. Cryptocurrencies are open source, decentralized and transparent.

The fallout from FTX does not justify and ban crypto

Toomey also addressed proposals that have been put forward which sat-crypto should be banned:

To those who believe that this episode justifies banning crypto, I would ask you to think of several examples. The financial crisis in 2008 involved the misuse of products linked to mortgages. Have we decided to ban mortgages? Of course not. A commodities brokerage firm run by former New Jersey Senator John Corzine collapsed after client funds – including US dollars – were misused to fill a shortfall from the firm’s trading losses. No one suggested that the problem was the US dollar and that we should ban it. With FTX, the problem is not the instruments used. The problem was misuse of client funds, gross mismanagement and probably illegal conduct.

To his colleagues who have suggested that crypto should be paused before he addresses it, he had this to say:

Some of my colleagues have suggested pausing cryptocurrencies until we can resolve it. This is deeply misunderstood, not to mention impossible. Short of adopting draconian, authoritarian policies, cryptocurrency cannot be stopped. If we tried, the technology would simply migrate offshore.

He further stated:

Are we going to decide to pause our constitution to stop crypto? This is exactly the kind of mindset that has driven this activity to the dark and less regulated parts of the world.

Would Congress be wise not to regulate the industry?

Toomey went on to say in his remarks:

Others have suggested that we refrain from addressing cryptocurrency at all, so as not to legitimize its use. This is not only misunderstood, it is irresponsible.

He emphasized:

Individuals can also gain immense power when using cryptocurrencies. They can protect against inflation when governments irresponsibly manage their own currencies. They can offer useful services without the need for a company or intermediary. And they can allow individuals to preserve the freedom to act privately.

Disclaimer: 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.

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