American politician wants to demand Proof of Reserves from brokerage houses

Physical cryptocurrency wallet inside a box with physical bitcoin coins Source: Regularguy.eth/Unsplash

At a press conference last Monday (5), American politician Richie Torres (Democrat) announced two crypto laws that would bring transparency to a volatile industry after the FTX crash.

As a Representative for New York’s 15th District and entering his second term, Torres was a strong supporter of crypto adoption, writing an op-ed for the New York Daily News in March arguing that crypto could help his voters by lowering fees and slowing growth. . traditional financial system, including international money transfers.

The two bills, named the Cryptocurrency Consumer Protection Act and the Cryptocurrency Brokers Disclosure Act, will address the factors that led to the collapse of FTX and the potential loss of billions of dollars in user funds, including requirements for exchanges prove and publish your assets and liabilities (Proof of Reservations), as well as a ban on brokers lending, using or mixing user funds without consent.

“Sam Bankman-Fried is no more a spokesman for crypto finance than Bernie Madoff is representative of traditional finance,” Torres said. “Cryptocurrency has a place in the American economy, but it needs to be carefully regulated.”

Torres was joined by representatives of Bronx Crypto, a company that organizes and provides educational tools for local investors, including its co-founder Julio Barrios, who told Luck who has another $1,000 stuck on FTX US.

Torres’ bills join a wide array of crypto laws, including the Senate Agriculture Committee’s Digital Goods Consumer Protection Act. During the FTX hearing last week, the committee announced that it would stop reviewing the language of the bill.

Torres is on the House Financial Services Committee, which will be chaired by Patrick McHenry (R-R) in the next session of Congress. Along with current President Maxine Waters (Democrat), McHenry drafted her own cryptocurrency legislation – the Stablecoin Bill – although sources familiar with the issue say it is still under discussion and will likely be moved to the next session.

Torres said he believes his bills can work alongside any stablecoin legislation, arguing that the need for transparency exists for stablecoins as much as it does for exchanges. He said that there are good players in the stablecoin space, including Circle and Paxos, but emphasized leashwhich is issuing the largest stablecoin by market capitalization, as the company that worries him.

Torres did not give a date for the start of discussions on his bill, citing a change in the leadership of the House of Representatives.

Despite his condemnation of FTX, Torres has mentioned the troubled exchange in recent articles. On November 29, Blockworks reported that Torres received Bankman-Fried-related campaign funds but donated them to charity.

On November 23, American Prospect reported that Torres was part of a group of eight members of the House of Representatives who wrote a letter to SEC Chairman Gary Gensler questioning the agency’s authority to send unofficial inquiries to crypto and blockchain companies, including FTX.

In response to a question from Fortune, Torres said it was a misinterpretation of the letter, arguing that it was about voluntary requests for information about unregulated companies.

“It’s not unusual for Congress to ask an agency to allocate its resources efficiently,” Torres said. “I would argue that the SEC misplaced its priorities because it spent more time investigating Kim Kardashian than Sam Bankman-Fried.”

Translated and adapted from Fortune Crypto.

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