Sam Bankman-Fried was found guilty on all seven counts of fraud in federal prosecutors’ trial against the former FTX CEO, one of the biggest fraud cases involving cryptocurrency in U.S. history so far. The decision has reverberated throughout both the political and financial landscapes as lawmakers have stepped forward to emphasize the need for further regulatory guidelines for cryptocurrencies.
Senator Cynthia Lummis (R-WY) is one such lawmaker who, alongside Kirsten Gillibrand (D-NY), is proposing the Responsible Financial Innovation Act to create a comprehensive regulatory framework for crypto assets. Yahoo Finance Senior Reporter Jennifer Schonberger joins the Live show to discuss her exclusive interview with Sen. Lummis and what the fallout from the FTX trial could have on crypto regulations.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
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– Sam Bankman-Fried has been found guilty of all seven charges he was facing, including wire fraud, securities fraud, and money laundering. He’ll be sentenced in March. Now much of the debate now, should this be seen as an idiosyncratic case of fraud or does it tell us anything material around the wider sector?
Well, some names are remaining bullish. MicroStrategy founder Michael Saylor saying Bitcoin ETF approvals would be a catalytic event with wide-reaching benefits, opening doors for more asset class adoptions. And ARK investments Cathie Wood reiterating her view that she would wager on Bitcoin to safeguard against possible deflation. Let’s bring in Yahoo Finance’s Jennifer Schonberger with more on what she’s been hearing about regulation in this space. Hey, Jennifer.
– Thanks, Rachelle. Good morning to you. In the wake of Sam Bankman-Fried’s guilty verdict and the collapse of FTX, Senator Cynthia Lummis told me in an exclusive interview Thursday that that is all the more reason for a clear, new regulatory framework for crypto. She told me she believes as some of these investment houses like BlackRock and Fidelity seek approval for a spot Bitcoin ETF, that could help push things faster. She told me she believes her very own comprehensive crypto legislation co-sponsored with Senator Kristen Gillibrand could get a vote early next year. Take a listen.
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– It’s important that we pass Lummis-Gillibrand as soon as possible, hopefully early in 2024, because it’s the complete regulatory framework for digital assets. Now I’m absolutely open to having it passed in segments. We put the illicit finance component of our bill in the NDAA with input from other members. We could put the commodities portion into the Farm Bill, so that would be the Bitcoin specific portion of the bill.
We could move some of this through the Finance Committee, some through the Banking Committee, but we’re crying out for a clear regulatory framework here. Now something that might help break the logjam on this is that certain traditional financial institutions, like Fidelity and BlackRock, will be approaching the SEC relatively soon, we believe, to request authorization for a Bitcoin exchange traded fund. And so as you see these traditional asset managers move into the digital asset space, I think that that is another indication that it’s time to have a clear regulatory framework.
So in the meantime, Senator Gillibrand and I will continue to push on the case for digital assets and a complete regulatory framework at the same time that we encourage the Justice Department to complete their investigation of Binance and Tether that were involved in the illicit finance of Hamas because their platforms were used and it looks like they turned a blind eye to that.
Another thing that’s happening with Tether is their stablecoin is a significant holder of US Treasury bonds. So because they are a big enough player in that space, there’s some risk to the US of having the stablecoin unregulated. So we’ve been really working with Patrick McHenry and the House to get the stablecoin component of our bill moving.
And we’re flexible. Senator Gillibrand and I see the small differences between the House and the Senate versions specifically related to stablecoins. We know they’re resolvable and we’re flexible with regard to that. So I think we’re going to be able to get to a resolution on stablecoin. Now that the US House has this wonderful new Speaker and they’re, again, open for business, we think we can turn our attention once again to the stablecoin component of our bill, possibly even still before the end of this calendar year.
– What about– you mentioned the stablecoin portion but we also know the House Financial Services has put forth their own framework for regulating crypto, something that would garner support on the House floor assuming we can get this government funded in time, perhaps as soon as this year, on the crypto front. Is that something you would support as well?
– Well, I am extremely supportive of whichever body, the House or the Senate, can move this legislation first, that they do so. Whoever has the political will to begin to move this forward is find for me. I am very flexible, willing to work with the House Committee. And in fact, we’ve been in touch with the House Committee, Democrat and Republican leaders, for months, and we stay in touch with them and our staff stay in touch with them. So these things aren’t happening in a vacuum between the House and the Senate. They’re happening with constant coordination between the House and the Senate.
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And Senator Lummis also told me on Tether that she wants more transparency because Tether holds so many US treasuries, perhaps in some cases more than other countries, and wants to understand whether that poses a systemic risk to our financial system. She also wants to learn who the US corresponding bank is here on Wall Street for Tether. Rachelle.
– All right, appreciate that update. Yahoo Finance’s Jennifer Schoenberg, I know people will be eagerly awaiting to see if we see that AI legislation go through.
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