Who's Going to Regulate Crypto?

A major exchange is pushing to give more power to the U.S. commodities watchdog

- By Robert Schmidt and Allyson Versprille. Illustration by Nicole Shinn

It was a classic Washington networking party. Sam Bankman-Fried, the co-founder and chief executive officer of FTX, one of the world’s largest crypto trading platforms, held court on a February evening in a private room at the Park Hyatt hotel on the edge of Georgetown. Drinks flowed from an open bar, and hors d’oeuvres were served to the clutch of congressional aides, financial lobbyists, and former regulators. The goal of Bankman-Fried, a 30-year-old billionaire, was to showcase his new lobbying operation—and to persuade influential Washingtonians that crypto needs more regulation.

It may seem strange that a crypto magnate is seeking federal oversight. But as lawmakers and bureaucrats grapple with how to police a fastgrowing and risky $2 trillion market, new rules seem inevitable. In March, President Joe Biden signed an executive order calling on federal agencies to work out policies on crypto. Bankman-Fried, whose company last year bought the naming rights to the Miami Heat’s basketball arena, is pushing his own ideas of what regulation ought to look like, as well as who his main watchdog should be.

He’s arguing for a bigger role for the U.S. Commodity Futures Trading Commission. The relatively small agency monitors futures contracts in basic goods such as crude oil, corn, and pork, as well as financial derivatives such as interest-rate swaps. It also oversees U.S. futures and options contracts on the popular cryptocurrencies Bitcoin and Ether. A U.S. affiliate of the Bahamas-based FTX offers such crypto derivatives, so part of its business is already under the CFTC’s purview.