CRS Reports – Week of 11-26-22 – FTX Reports

This week the Congressional Research Service published two reports related to crash of FTX Trading:

• SEC Jurisdiction and Perceived Crypto-Asset Regulatory Gap: An FTX Case Study, and

• What Happened at FTX and What Does It Mean for Crypto?

SEC Jurisdiction

The first report takes a look at the SEC investigation. Interestingly, FTX Trading is not subject to SEC jurisdiction because it did not operate in the United States. A subsidiary, FTX.US, with a more limited scope of investment activities, is registered and licensed in the US.

Topics covered in this report include:

• SEC investigation of FTX,

• SEC jurisdiction,

• Perceived crypto-asset regulatory gap, and

• Policy questions for congress

What Happened

The second report looks at the currently available information about how the FTX crash happened and what it means for future crypto-asset policies. Topics addressed include:

• What is FTX and what happened?

• Another “crypto winter”, and

• Policy options for Congress

An interesting policy point is made:

“Currently, there is no comprehensive regulatory framework for cryptocurrencies or other digital assets. Instead, various state and federal financial industry regulators apply existing frameworks and regulations where exchanges or digital assets resemble traditional financial products. As such, regulators may treat digital assets as securities, commodities, or currencies depending on the circumstances.”

CRS Reports

The CRS is the research arm of Congress. These reports are designed to inform legislators and their staffs about issues upon which Congress may be called to regulate or oversee. While individual legislators and staff members may rely on other sources of information, for members not intimately involved or interested in a specific topic, CRS reports may form the most comprehensive source of information upon which they rely upon for supporting policy actions.