At a glance
- The chair of the Commodity Futures Trading Commission (CFTC), Michael Selig, said on Friday that the Binance hack “proves our exact point” about the agency’s push for crypto market rules, according to Decrypt, which reported his interview with CNBC.
- The Digital Chamber, an industry group, wrote to the four congressional leaders asking for a targeted bill on exchange custody and security before this Congress ends.
The hack is the reason. Binance said on Thursday that attackers had pushed through unauthorised withdrawals with an estimated impact of about $6.3 billion. It has promised to cover all losses.
What officials say
“The real issue here is that these are unregulated offshore exchanges, and they don’t have the same sorts of safeguards that we have in our financial markets here in the United States,” Selig said, as quoted by Decrypt. He pitched a “federal option” under which such venues could register with the CFTC.
The CFTC opened the CFTC’s request for comment on retail crypto rules on 5 Oct. Comments are due by 14 Dec.
President Donald Trump said at a press conference on Friday that he was looking into the hack and that Binance had said customers would get their money back, The Block reported.
“But it’s a hack,” he said. “That’s the problem.” He added: “So I’ve always felt it was a little bit dangerous.”
Rep. William Timmons, a South Carolina Republican, posted that “America cannot allow rogue regimes to exploit digital assets to finance their nuclear weapons and ballistic missile programs.”
What industry asks
The Digital Chamber’s letter, signed by chief executive Cody Carbone, asks for three things at a minimum.
- Exchanges and custodians would keep customer assets separate from their own, out of reach in a bankruptcy, under qualified custody and with independent attestation.
- The CFTC would get registration, examination and enforcement powers over US spot crypto exchanges, brokers and dealers.
- Firms would need several approvals to move customer assets, strict limits on privileged system access, real-time monitoring and prompt incident reports.
“Regulators can only act after the damage is done,” the letter says of the current system. It points to the Senate Agriculture Committee’s Digital Commodity Intermediaries Act, which has cleared committee, as a ready base.
What critics say
The sharpest exchange was over a senator’s post. Sen. Cynthia Lummis, a Wyoming Republican, wrote that “The Clarity Act would have given crypto firms legal cover to freeze suspicious transactions the instant law enforcement calls.”
Amanda Fischer, policy director and chief operating officer at Better Markets, a group that favours tighter financial rules, replied: “This is not true. Clarity requires stablecoin issuers to freeze per a court order.”
Patrick Wilson, general counsel at the Solana Policy Institute, answered her that section 10305(b)(1) of the bill protected stablecoin issuers from private lawsuits over voluntary, temporary holds. “No court order required,” he wrote.
The Clarity Act, the House’s crypto market structure bill, has stalled in the Senate, Decrypt noted.
What happens next
Congress has not scheduled a vote on any of these proposals. The CFTC’s comment period runs to 14 Dec.
Binance says withdrawals should begin to resume early on Sunday, 1 Nov, and that a full proof-of-reserves report will follow on Monday.
Related: How Aave responded to the exploit
This article is for information only and is not investment advice.