During the recent debate on Dec. 6, Vivek Ramaswamy, an entrepreneur and Republican presidential candidate, expressed concerns about the current U.S. regulations for the cryptocurrency industry. He pointed out that these regulations are not up to date and ineffective in protecting consumers. As evidence of this, he cited Sam Bankman-Fried, the founder and former CEO of now-defunct crypto exchange FTX.
"Fraudsters, criminals, and terrorists have been defrauding people for a long time. Our regulations need to catch up with the current moment," Ramaswamy said. "The fact that SBF was able to do what he did at FTX shows that whatever they have as the current framework isn’t working, and I think it is nothing short of embarrassing that Gary Gensler, the current leader of the SEC, in front of Congress, could not even say whether Ethereum counted as a regulated security or not."
According to The Block's report on Nov. 2, a jury found Bankman-Fried guilty of seven criminal charges including wire fraud, conspiracy to commit wire fraud, and money laundering.
In November 2022, NPR reported that customers began withdrawing their funds from FTX after noticing red flags about its financial health. This led to an effective bank run revealing that FTX was not fully holding customers' money. Consequently, FTX and its associated hedge fund Alameda Research filed for bankruptcy on Nov. 11, 2022. A month later, Bankman-Fried was extradited from the Bahamas.
CoinDesk reported that during a House Financial Services Committee hearing in April, SEC Chair Gensler declined to comment on whether Ethereum is considered a security. Ethereum currently holds the position as the second-largest cryptocurrency by market cap.
According to Crypto.News, Ramaswamy unveiled his proposed policy framework for the crypto industry at the North American Blockchain Summit in Texas in November. He emphasized that the regulatory framework for the U.S. crypto industry should be clearer and that Gensler should be able to state whether a widely used cryptocurrency is a security or not. His plan includes reining in the SEC's "regulation by enforcement" approach, prohibiting federal agencies from restricting the use of self-hosted wallets, and prosecuting bad actors. Under Ramaswamy's framework, crypto tokens would largely be classified as commodities rather than securities.
Ramaswamy, an Ohio native, is an entrepreneur and author, as per his website. He founded Roivant Sciences, a biotech company that developed five FDA-approved drugs under his leadership.
