New Bill Calls for Crypto Data Repositories After FTX Collapse

• A new bill proposes cryptocurrency exchanges to report internal transaction data to outside repositories for regulators’ access.
• The bill’s sponsor is Rep. Don Beyer (D-VA), aiming to increase transparency and prevent fraudulent activities like those leading to FTX’s failure.
• Exchanges must share daily flows of crypto buying, selling, and transfers with regulated third parties under the proposal.

A new bill proposes requiring cryptocurrency exchanges to report internal transaction data to outside repositories accessible by regulators. The legislation aims to prevent large platforms from obfuscating activities like those leading to FTX’s failure.

The bill’s sponsor, Rep. Don Beyer (D-VA), believes mandated repositories would curb potential fraud by increasing transparency. Under the proposal, exchanges must share daily flows of crypto buying, selling, and transfers with regulated third parties.

Regulators want to analyze risks and misconduct

Regulators like the Commodity Futures Trading Commission and Securities Exchange Commission could then analyze the aggregated data for risks and misconduct. Currently, many routine crypto trades happen internally at major exchanges without being recorded on public blockchains.

Beyer has held talks with Republicans interested in merging the repository requirement into broader crypto legislation already progressing through Congress. But the bill faces unclear odds given that GOP lawmakers have largely set the crypto agenda under a divided government.

Still, Beyer believes repositories would mimic successful reforms in the 2010 Dodd-Frank Act, applying similar transparency to swap trading after the 2008 financial crisis. Supporters argue the significant change is overdue to provide much-needed visibility into opaque exchange activities.

But critics may challenge the added costs and question whether regulators can effectively parse so much complex data. Some argue that revelations about FTX’s mismanagement mainly show existing tools should be better leveraged.

The bipartisan Blockchain Caucus co-chair said the urgent need outweighs reservations following FTX’s failure. Beyer contends repositories are essential to prevent repeats of what he calls “insufficient internal record-keeping” that hid FTX’s misuse of customer funds.

Exchanges may resist the intrusive monitoring and argue it could undermine privacy and commercial secrets. But lawmakers like Beyer believe restoring trust demands aggressive action in response to recent turmoil.

For now, the novel idea’s prospects remain uncertain in a Republican-led House more amenable to industry-friendly legislation. Gaining GOP support would likely require addressing concerns over regulatory overreach and economic impacts.

But with public confidence shaken, even crypto-friendly lawmakers may recognize the need for strong safeguards. The policy debate highlights tensions between innovation and oversight as digital assets go mainstream.