Soto Calls for Investigation into Cryptocurrencies

The recent scandal over cryptocurrency company FTX has led to questions regarding digital money. Specifically, Rep. Darren Soto (D-FL-9) calls on the Securities and Exchange Commission (SEC) to investigate and regulate cryptocurrencies and blockchain systems. More surprisingly, his request has received bipartisan support in Congress, with Rep. Byron Donalds (R-FL-19) listed as a signer of the March 16, 2022, along with several other Democrats and Republicans.

"Rep Soto believes a federal investigation into FTX is more than warranted due to alleged misappropriation," Soto tweets, the first in a thread of several. "Soto condemns theft of consumer money by any industry, including cryptocurrencies," he adds, followed by "the SEC should act."

In the letter, Soto notes that "the SEC's regulatory functions, while broad, are limited to the extent of its statutorily mandated jurisdiction."

Because of this, he says, the SEC's investigative division is making use of "unregulated cryptocurrency and blockchain industry participants" to obtain information.

Much of the questioning Soto and others seek in the letter involves this form of information gathering. Examples include how frequently the SEC sent voluntary document requests to these entities, how many questions they asked in these requests, and compliance costs. More specific questions ask if the SEC has conducted a cost-benefit analysis of these requests, and if the SEC has created a pilot program in information collecting through crypto and blockchain.

However, it is worth noting that this letter is well before the FTX scandal.

"The focus of the bipartisan March 16, 2022 letter was on the cryptocurrency industry as a whole," Soto clarifies. "It was approved by Financial Services Committee Oversight legal staff," he adds, saying that "the letter sought clarity on SEC positions regarding its document request authority for crypto firms in general."

Thus, says Soto in another tweet, "the letter was not specific to FTX, didn’t reference FTX, nor did our office have any contact with FTX regarding the letter. The letter did not stop or slow down any investigations into FTX. Rep Soto also has not received any contributions for FTX."

Regardless, the fact that this call for investigation has bipartisan support demonstrates the urgency at which Congress must act.