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US Senator Cynthia Lummis believes that FTX’s bankruptcy would not have happened under the Lummis-Gillibrand Crypto Bill. She pointed out, “It’s clearer than ever that we need comprehensive regulation in the digital asset space.”

Senator Lummis Explains How His Crypto Bill Would Prevent FTX Disaster

U.S. Senator Cynthia Lummis (R-WY) explained in a series of tweets on Monday why collapsed cryptocurrency exchange FTX wouldn’t have gone bankrupt if Congress had passed its crypto bill. The cryptocurrency trading platform filed for bankruptcy Last week.

The Wyoming senator has been a bitcoin supporter for some time. her personally possesses BTC and think bitcoin is something the Federal Reserve should hold on its balance sheet. She has repeatedly said that cryptocurrency is an excellent store of value.

She tweeted on Monday:

FTX bankruptcy would not occur under the Lummis-Gillibrand bill.

Lummis and Sen. Kirsten Gillibrand (D-NY) introduced the Responsible Financial Innovation Act in June. The two lawmakers described the bill as “historic bipartisan legislation that will create a comprehensive regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency, and strong consumer protections while integrating digital assets.” in existing legislation.

The Wyoming senator explained in different tweets that the bill deals with “clear ownership rights (not your keys, not your coins!)”, provides “strong protection and segregation of customer assets on an exchange”, and puts “strict limits on leveraged and lending digital assets. In addition, it provides “bankruptcy protection for all clients” and ensures “transparency into an exchange’s affiliates and connected organizations.”

Lummis also told the Cowboy State Daily that FTX’s collapse couldn’t have happened in Wyoming. The senator detailed: “As of 2019, we have known that affiliate transactions with digital assets are dangerous. And that’s why it’s illegal in Wyoming… In Wyoming, there are strict limits on affiliate transactions like the ones that happened between FTX and its sister organization called Alameda.

She described:

The Lummis-Gillibrand bill, for example, requires that an exchange not use client assets for proprietary trading and retain 100% of client assets for withdrawal at any time.

Additionally, she said the bill “requires the use of an independent bank or trust company as a custodian, similar to what would currently happen with SEC and Commodity Futures securities. Trading Commission”.

Senator Lummis told CNBC on Tuesday, “We need to make sure we balance innovation with consumer protection…Buyer beware, these overseas-based companies operate under the laws of different countries because they are more advantageous for these companies.

Following FTX’s bankruptcy filing, Lummis tweeted:

It is clearer than ever that we need comprehensive regulation in the digital asset space.

She emphasized, “Senator Gillibrand and I are prepared to offer the solution. It’s time for Congress to pass the Responsible Financial Innovation Act to protect Americans’ hard-earned money.

Other crypto bills that have been introduced in Congress this year are the “Digital Products Consumer Protection Act 2022” and the “Digital Goods Exchange Act 2022.”

What do you think of Senator Cynthia Lummis’ comments? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

Image credits: Shutterstock, Pixabay, Wiki Commons

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