Following the crash of cryptocurrency exchange FTX, Senator Bob Menendez (D-New Jersey) announced (“US lawmakers call for more crypto regulation after FTX collapse,” financial barNovember 15, 2022):
This should be a renewed call for Congress to take a serious look at crypto exchanges and lending platforms, many of which engage in risky behavior while marketing themselves as safe for consumers.
We could say something similar, with much more evidence and theory to support our claim: “It’s time to take a serious look at governments that engage in risky behavior while marketing themselves as safe for their citizens.” Just think of federal power and the public debt, which increases with and between each emergency and rarely decreases.
The naive arrogance displayed by state rulers is not confined to one side of the aisle. The financial bar Continued:
Cynthia Loomis – the Republican senator from Wyoming, who authored a bipartisan bill that created a comprehensive regulatory framework for digital assets in the US – described the FTX turmoil as “terrifying and not so surprising at the same time”.
“It’s clear that Congress needs to regulate digital assets,” he added.
That Sam Bankman-Fried, the entrepreneur who founded and ran FTX, was a major donor to the Democratic Party and allied groups makes this episode less revealing (“Sam Bankman-Fried’s downfall has cut off a major source of funding for US Democrats” financial bar, November 13, 2022):
Before the collapse of Bankman-Fried’s cryptocurrency exchange FTX, it emerged as the second-largest donor to Democrats after entrepreneur George Soros. …
The entrepreneur was the second-biggest donor to Democratic-leaning groups during the last midterm election, spending $36mn.
He hedged his rent-seeking bets, but apparently only marginally:
During the 2022 cycle, Bankman-Fried donated $155,000 to right-wing PACs: Alabama Conservatives Fund, which supported Republican Alabama senator-elect Katie Britt, a crypto supporter; And Heartland Resurgence, which supported Senator John Boozman of Arkansas, the top Republican on the Senate Agriculture Committee that oversees crypto.
The rather ridiculous feature of the story is that the Senate Committee on Agriculture, Nutrition and Forestry “oversees” cryptocurrencies.