Despite the turmoil caused by the crash of the crypto-exchange FTX, the US’ midterm election is influencing and reshaping regulation in the crypto industry.
Analysts predict that Republicans will regain control of Congress if there is a clearer outcome to the U.S. midterm elections. The regulation of virtual assets and cryptocurrency might be affected by the dynamic discourse and shift in balance of power.
Many leaders and companies in the crypto industry are trying to increase their influence and ability to lobby legislators during the election campaign by making political donations to their candidates.
According to Reuters and OpenSecrects data, the report revealed that FTX’s CEO Sam Bankman Fried, also known under SBF, was the man behind the scandal. This mid-term election saw a large participation of the senate. It has contributed significantly more than any other person in the cryptocurrency industry.
Data shows that Bankman-Fried’s total contribution of approximately $40 million makes him The sixth-largest individual donor to the United States. According to OpenSecrets, the vast majority of his donations are to Democrats. However, less than 0.6% of funding goes to support Republicans.
Meanwhile, SBF’s deputy- Ryan Salame, Co-CEO of FTX Digital Markets, provided over $23.6 million to Republicans, including over $11,000 supporting Rep. Alex Monnet of West Virginia. Salame’s total donation made him the 14th most important individual donor.
However, SBF’s commitments were questioned in light of the latest gridlock at the FTX.
Mid-term results are a result of oscillation in the markets following the collapse of FTX, the crypto exchange of the SBF. Changpeng Zhao Binance announced the acquisition of FTX by a non-binding note of intent. Although the terms of this deal were not disclosed nor was there a timeline, the market is experiencing a new wave volatility and turmoil amid the crypto winter.
Regulating Crypto Bills remains ambiguous
An analyst suggests that a Republican-dominated Congress could put pressure on agencies like the Securities and Exchange Commission. The industry has charged the SEC with regulating through enforce, and to lessen their aggressive posture towards crypto firms.
In June, A bill was presented by a bipartisan pair of U.S. senators that would create new legal frameworks for crypto and give the bulk of their oversight over to the Commodity Futures Trading Commission.
The so-called “Crypto Bill” debate is still ongoing in Congress. If passed, the bill could allow the CFTC to monitor the crypto market. This is because it considers the CFTC a more crypto friendly regulator than the SEC.
One of the controversial issues when regulating crypto is the definition and classification of “security”. Which financial products count as security? Commodities. Who What authority does it have and how do you regulate it? These are all questions that remain unanswered.
Previously, the CFTC Chair suggested to Congress that crypto regulation should be allowed. This would be much better than current gridlock between CFTC & SEC.
In the meantime, serval legal fights between SEC, virtual assets companies, like Ripple, continue to struggle for an endgame. The SEC sued Ripple labs in December 2020. They claimed that Ripple Labs had raised more than $1.3 billion through unregistered securities transactions. Ripple argued that XRP sales were not compliant with the Howey Test. It is a test established by the Supreme Court for determining whether a transaction is a security.
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