FTX's collapse shows that lawmakers need to learn more about crypto to properly regulate it, according to a Republican lawmaker who's pushing a bipartisan digital assets bill

• FTX's collapse underscores the need for US lawmakers to learn about crypto and widen regulation, Senator Cynthia Lummis says.
• Lummis introduced a bipartisan crypto bill with Democratic Senator Kirsten Gillibrand in June.

The implosion of cryptocurrency exchange FTX underscores the need for US legislation aimed at greater regulation of digital assets, according to Republican Senator Cynthia Lummis who introduced a bipartisan crypto bill earlier this year.

"I hope [FTX's collapse] highlighted with members of Congress who have not taken the time to learn more about this asset class, that it's time for them to learn more about it so we can engage in proper regulation," Lummis told the Financial Times in an interview published Monday.

The Wyoming senator along with Democratic Senator Kirsten Gillibrand of New York in June unveiled their Responsible Financial Innovation Act, a bill touted as, to date, the most comprehensive bipartisan effort to create a regulatory framework for digital assets.

Lummis is considered one of the more well-versed Washington lawmakers on the subject of crypto. She bought bitcoin in 2013, and in October 2021 reported that it amounted to between $50,000 and $100,000. She told Protocol in June she put her bitcoin holdings in a blind trust after receiving "so much grief" for owning the cryptocurrency.

Lummis told the FT she wants stricter rules around companies like FTX as they trade, have custody of clients' assets, and are engaged in circular lending practices such as rehypothecation, where the same asset can be lent multiple times.

The senator also said her bill would ban the commingling of customer assets with investments that belong to an exchange. FTX's collapse is rooted in allegations that founder Sam Bankman-Fried used customer assets to support his crypto trading firm, Alameda Research. FTX, once valued at $32 billion, is pursuing Chapter 11 bankruptcy protection.

Lummis said she's "very hopeful" her bill, which is in the Senate finance committee, is high on the legislative agenda when Congress reconvenes in January. She also told the FT she's working with the US Securities and Exchange Commission to ensure her bill wouldn't create loopholes for some non-crypto companies to evade oversight.