Former U.S. FDIC Chair Says Lawmakers Have To Resist Lobbying From Crypto Industry

Bair says regulators have to work together, and lawmakers have to do better at resisting lobbying from the industry.

Former chair of the US Federal Deposit and Insurance Corporation, Sheila Bair, has said that there is a lot that needs fixing for the crypto industry to get clear regulations in the US in a recent episode of CNBC’s Squawk Box shared today.

The former regulator made this known when asked about the reason for the sluggishness of regulators in the US to create crypto guidelines which pushed crypto exchanges like FTX to the Bahamas. 

According to the former FDIC chair, the fact that there are separate regulators for commodities, securities, banks, etc., is already an issue. Bair says this leads to disputes about who regulates the market, distracting policymakers from actual regulations. In addition, she noted that regulators are under pressure from lawmakers that are “heavily influenced” by industry participants.

Consequently, Bair notes that regulators like the US Securities and Exchange Commission and the Commodity Futures Trading Commission, who depend on Congress funding, end up “a bit timid.”

She surmises that regulators must work together for the crypto industry to get clear rules, and Congress has to be less susceptible to lobbying efforts from industry participants.

“There are a lot of things that need to be fixed,” Bair said. “more consolidation among regulators and Congress, exercising greater restraint when the lobbies come knocking on their door.”

Bair’s statements come in the wake of the spectacular collapse of FTX, a once-leading crypto exchange. Notably, several reports and findings from the exchange’s bankruptcy proceedings reveal gross mismanagement of corporate and client funds.

The crypto community and the finance world, stunned by these events and how they could have happened in a “regulated” crypto exchange, have poked holes at the integrity of regulators and lawmakers. For example, the crypto community has drawn the attention of Congress to links between SEC chair Gary Gensler and FTX founder Sam Bankman-Fried. In addition, reports recently revealed that members of Congress intervened in March when the SEC requested information from crypto exchanges, including FTX, with five members from the group receiving campaign donations from the crypto exchange.

After a year of mostly signaling, there are still no clear guidelines for the emerging market in the US. Recently, Ripple Chief Brad Garlinghouse asserted that the US is behind other G20 countries in crypto regulations.