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U.S. House schedules its first FTX hearing as ECB President Lagarde calls for broader crypto regulation

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(Kitco News) - The collapse of FTX and its ecosystem-wide implications for the crypto sector has motivated lawmakers from around the world to dedicate more attention to the regulation of the nascent asset class. 

In the U.S., House lawmakers have revealed that they will begin their investigation into the collapse of FTX at a hearing scheduled for December 13. 

The hearing has been titled “Investigating the Collapse of FTX, Part I” and is expected to be the first in a series of hearings exploring the exchange, its business dealings, and the broader implications of its demise. 

The witness list for the hearing has not yet been released, but Rep. Maxine Waters, D-CA, and ranking Republican Rep. Patrick McHenry, R-N.C. previously stated that they wanted Sam Bankman-Fried, the former CEO of FTX, to participate. They also indicated that they would like to hear from other companies involved in the recent developments including Bankman-Fried’s Alameda Research trading firm and rival exchange Binance.

Lawmakers in the Senate are also looking to explore the FTX crisis more in-depth, with the Senate Agriculture Committee scheduled to hold a hearing on Thursday, while the Senate Banking Committee is working on scheduling a hearing of its own in the near future.

New FTX developments continue to roil crypto markets

Lagarde reiterates calls for crypto regulation

Across the pond in the EU, European Central Bank President Christine Lagarde said that the “stability and reliability” of crypto “has been exposed in the most obvious way recently” while fielding questions from policymakers in the European Parliament concerned about the implications of FTX’s downfall. 

This line of questioning prompted Lagarde to reiterate a previous call for increased legislation around cryptocurrencies as parliament awaits a final vote on its Markets in Crypto-Assets (MiCA) regulation, which is expected to pass in early 2023. 

According to Lagarde, enforcing MiCA will position Europe as "pioneers in this world of great inventivity and great unreliability,” but added that “there will have to be a MiCA II” as part of its efforts to embrace more supervision of crypto.  “Europe aims to be a leader in that respect,” she said. 

During previous discussions on the topic of MiCA II, Lagard suggested that the expanded framework must address risk-producing connections to traditional finance along with crypto activities outside of MiCA’s scope, such as decentralized finance (DeFi). 

A digital payment alternative is also needed in Lagarde’s view, one that will offer EU citizens unrestricted access to a digital euro. “We have to be able to offer that, otherwise somebody else will take that place,” Lagarde warned. 

The decision on whether the EU will move forward with the implementation of a digital euro is expected by September 2023. 

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