On 14 Feb, the Senate Banking Committee held a hearing to discuss the recent “crypto crash” and proposed new regulatory safeguards for the cryptocurrency industry. Skeptical members of the committee heard from both crypto enthusiasts and evangelists in an effort to understand the failures that have plagued the industry in the past year, including the Terra (LUNA) debacle.

The hearing addressed concerns about the risk of fraudulent behavior, scams, and illegal activity related to cryptocurrency. Sen. Sherrod Brown, the committee’s chairman, expressed worry that cryptocurrency could be used for illegal operations like drug trafficking and human trafficking. He also reiterated concerns expressed by governments and central banks a decade ago.

Sen. Tim Scott, the ranking member of the committee, opened the hearing by stating that they needed to hear from the SEC Chair Gary Gensler directly to understand recent regulatory actions. He also hinted at charges against Kraken and Paxos. Brown, in his opening remarks, stated that crypto catastrophes had exposed what many already knew about digital assets, cryptocurrency, and stablecoins.

The government officials conducted an investigation with the assistance of three witnesses to evaluate the requirements and advantages of establishing a regulatory framework for the cryptocurrency business.

However, not everyone was persuaded that imposing extra regulations is the best way to address the problems facing the crypto sector. Scott claimed that federal authorities already held the power to clamp down on corporations such as FTX. He stated that it is important for regulators to enforce existing regulations and conduct appropriate supervision.

The discussion centered on the need to establish a regulatory framework for the cryptocurrency industry to safeguard savers and investors. The hearing took place at a crucial time for the cryptocurrency market, which currently faces a series of scandals, fraud, dramatic arrests, international manhunts, hacks, exploits, and obtrusive marketing. In many instances, major financial authorities such as the SEC, NYDFS, and Justice Department have intervened in crypto firms to either penalize or bar them from continuing operations.