>> live from bloomberg's world headquarters manhattan i am matt. >> welcome back to a special extended edition of bloomberg crypto, people shaping the world of decentralized finance, when we say people we talk about one person particular. we talk -- we are talking about ftx, breaking news crossing the wire, ftx u.s. says trading may be halted within a few days.

withdrawals will remain open, customers should close down any positions they want to. sonali basak is with us as well, trading may be halted a few days. >> ftx is not part of the deal that involved finance. again, now, this is firmly also a u.s. exchange issue. >> it is a black box, part of the problem come we do understand exactly what happened at ftx.com, we do not know how enacted ftx u.s. is, maybe they have a similar problem in terms of a capital fork -- shortfall. we are not 100% sure about jurisdiction of u.s. regulators. you would assume if they have jurisdiction over ftx, we are not clear if they have jurisdiction over ftx.com sitting in the bahamas. >> first we want to talk about

potential macro rug medications -- ramifications. he was on bloomberg television today, talking about how you expects the contagion to ripple through other asset classes. >> what is this do for the economy slightly longer term? less spending in semiconductor chips. you will see less ad spending coming might be able to get through a sporting event without matt damon telling us to march up and do something exciting. finally we'll see less energy use as mining drops. there will be a lot of real-world repercussions for this. >> that is a take on the macro picture, the only picture the market is focused on, crypto is not a cooler inflation, we are not seeing a big rally across the board, equities up 4.4%, -- s&p 500 up 44%, nasdaq up 5.9%,

what is helping out big tech stocks is the fact that yields are sinking. we are down 23 basis points on the 10 year treasury, while the dollar is dramatically weaker on the day. bloomberg dollar index down 1.6%, how that translates into the crypto space it is been a bad week. today a bit of a rebound, bitcoin up 10%, ether is at up 14% on the day, ftx token, the native token of ftx, up 137%. that only gets us to 4.32, another exchange, coinbase up 9% on the day. clearly there has been a lot of volatility in the space the last several days. >> is the cpi numbers that are helping, not only traditional finance, but also crypto markets absolutely rip face today. let's focus on the continued

turmoils in crypto, wrapping up pressure on regulators to step in. >> market events over the last couple of days have been shocking. >> continuing to reverberate across crypto markets and beyond. >> what we have seen over the last six or eight months, and bits of turmoil in the crypto market. elective disk -- the lack of disclosure, opacity. >> from three arrows, we have seen a lack of -- >> must be at the core of the firms in the crypto space. >> we have been working director with bipartisan bills to develop a regulatory framework. to protect investors and ensure market stability. >> without the strong protections in space -- place you may see more instances like this. >> the investing part -- public is hoping for a better future. they are not having it here. >> we heard from a lot of

regulators there. let's talk to one more, sec commissioner joins us now. thank you for your time. let's ask you about the question of jurisdiction. if you can, agreed that ftt, the ftx token is a security, would be able to step into a business that is outside the borders of the u.s. operated from the bahamas? hester: i am not going to speculate on whether or not we have jurisdiction over any of the events going on at the moment. i think the questions around lack of jurisdictional clarity are partly our fault. we have had opportunities, we have been asked time and again to provide more clarity about where jurisdiction lies. we have not done so. that is part of the reason you all have the questions that you have right now. >> we just heard from republican senator pat toomey who put out in a tweet that the crypto

sector has been operating far too much ambiguity. because regulators have refused to give well-meaning actors guidance, nb, refused act. why has this happened so slowly? like can you not regulate this industry more quickly? hester: we have been unwilling to work with people in the industry, and the people interested in participating in the industry to develop guidelines that made sense for the industry. instead, we have preferred to take an approach that is rooted in enforcement. often enforcement actions come very late. , after relatively small actors in the market. it is not a good way to do the hard work of thinking of what a framework would look like. >> do you need congress at some level to tell you which parts of this industry you ultimately should be responsible for? is it to you entirely? or, do you need assistance from others in washington dc?

hester: that is a great point. it would be helpful to get congresses decisions around who they think should be regulating in this area. if the sec should be regular and -- regulating crypto trading platforms. >> in a tweet a bit earlier by elizabeth warren there was a mention of enforcement. brian armstrong, brad, really saying that there is no regulatory clarity as you were hitting up before. do you think the next couple years will be a lot more of the same? enforcement, enforcement, enforcement or will there be real rules to the road after what we saw with ftx? >> i have been disappointed with the way u.s. regulators and the sec has approached this. it has been using enforcement, in some ways it changes the dynamic of the conversation if you are having it in an

enforcement action rather than an open public discussion about the right regulatory framework for the new emergency is -- emerging industry is. there are areas we need to make adjustments. that has been a problematic approach. >> i am curious of what you think of a comment made earlier this week, to us at bloomberg tell vision. he thinks -- television, he thinks there is a lot of people in d.c. who feels duped. he had been a huge political donor, how do you think lawmakers feel, not just about freed, but the industry given the trust that may have been breached in a situation like this? hester: i do not want to talk about an individual person or entity. i want to say that the idea behind many of these innovations in crypto is to move away from

centralized entities or particular people. two look at on chain develop and of innovation, on chain activity that is transparent. that anyone can audit. you could have -- you have to have the technical effort -- ask for teas to do it. it is out there for everyone to see. everyone interacts with a on the same terms. that transparency in the decentralized nature is a lot what people in industry are striving for. weapons that centralized entities, is obviously -- what happens at centralized entities is relevant right now, people are suffering consequences of the same kinds of proms we see in the traditional financial industry. the goal is to move towards a more transparent, decentralized, brilliant system. >> have you started receiving complaints from the american

investors worried that they will not be made whole by ftx.com? hester: i think we have been seeing a lot of concerns. the same concerns others are seeing. this is another area where the lack of regulatory clarity is problematic. if we will not have regulatory clarity we need to tell people you have to be particularly aware, if there is a problem comey cannot come to the sec for relief. the ambiguity has not served the american public well, either. >> what you think more broadly about charges, jamie dimon for example have made and others about bitcoin being a giant ponzi scheme? if that was a case it would seem like something the sec would be concerned about. hester: markets are about people coming with different opinions and views on value of different assets. coming together and working that out in the marketplace.

what we should be doing as a regulator is allowing these markets to work. not standing in the way of the markets working, and people bringing those different valuation opinions there. that is what we do for other asset classes knows what we should do for this one as well. >> considering the scale we've seen a lot of firms lose customer money this year and file four risky -- bankruptcy. we are not saying it is happening to ftx, it is a reality of the could not get the funds secured. do you think the tone among regulators, and with the industry has the risk becoming more hostile than it has already been? hester: i think we can take a moment like this and use it to turn to a more productive approach. this is not an approach is as anything goes. this is a process as we have these mandates to protect investors, facilitate capital

formation, make sure markets have integrity. we need to make sure these mandates are being abided by here. we can work with you on the way to get there. this is the moment for us to take a more productive approach. i think one that will end up being better for everyone involved. that is what i would like to see us to from this moment on. >> we appreciate your insight, think you so much for joining us, sec commissioner hester. with an optimistic tone. don't you think? >> maybe, will have to see what regulation ultimately transpires. coming up will have more of the legislative perspective and how this whole episode can change the crypto relationship with congress. she joins us next. this is bloomberg. ♪

>> there is probably a lot of people in d.c. right now scratching their head feeling like they had been duped or deceived by this person who may have not have had things exactly in order. i hope it is not tainted their view of the crypto industry broadly. >> that was coinbase ceo brian armstrong on crypto's reputation as taking baby hit this week -- taken a bit of a hit this week. great to speak to you as always, how much damage is done -- has been done to washington and this industry because of this

episode? >> i've always seen the approach that ftx has brought and spf personally to the conversations in washington have been a bit odd. we were the first organization in the country to advocate for the digital asset and blockchain technology ecosystem. ftx was not established until five years later. they were here much later to the game and they came out with a very aggressive way to approach policymakers. there is a lot of goodwill done by the team by our member at the chamber, members of the chamber, that supersede the work ftx has done. from a reputational perspective, it definitely rings -- brings, and reinvigorate the skepticism we have from regulators and policymakers. there is an entire industry of people on the ground in washington educating

policymakers about this industry. he is not the face of the industry in washington, he never was come up to has been misreported. matt: what are you hearing from your members right now, i am sure many of them are probably, or were ftx clients. counterparties to alameda, where they telling you? guest: all of our members who had, potentially had exposure to ftx, everyone is putting out statements disclosing publicly any exposure to ftx or the token. any contagion around this. most of our members we have not seen any big news out of our membership so far. this is really more about the customers. retail investors, that is where the biggest concern is today. we are concerned about the regulatory oversight.

anytime there is a crisis or something goes bad a lot of times policymakers overreact. we see similar instances before, back in 2013, the chamber was established during the aftermath of mount gogs, at what came out of that was the new york license. we do not want to see the similar reaction because there is one bad actor, one bad event, when i have policy making done in an informed way. we want to make sure that any policy response is done in a way that truly addresses gaps in disclosure regimes and not based out of beer. -- fear. >> i hear it in your answer here. are you saying lawmakers are at risk of not trusting allowed members of the industry anymore after how much money has been lost in this ftx.com issue?

do you think that some of these changes will face a setback for a while? guest: has trust been lost? at the end of the day, this is an overseas entity. where this has spurred from. we just heard from the sec commissioner really enforced this point. this industry has operated in regulatory uncertainty for a long time. we have been clambering, the chamber, the members, the industry has been asking for regulatory for years. that has forced so much activity overseas that has been to the detriment of american investors. particularly retail investors. it is really important we have a regulatory framework that is not enforcement focused. i do not want to place all of the blame on the policymakers. we did have an unusual situation

here. even if we had perk -- perfect policy you cannot plan or mitigate against day bad actor in all circumstances -- against a bad actor in all circumstances. if we had a more thoughtful approach to policy making the u.s. we could have mitigated a response. >> as a crypto chaos is going on is easy to forget we had midterm elections here in the u.s. on tuesday. we do not know what the composition of congress is going to look like. how optimistic are you that something bipartisan could get done on crypto legislation in the new congress? guest: it is very possible. we will likely have a divided congress. regardless of which party ends up taking control of which chamber. it will be by very slim margins. there is bipartisan support. some policymakers will say this is a nonpartisan issue. the difference between nine

partisan and bipartisan, logical say -- nonpartisan and bipartisan, love people say crypto is nonpartisan. no different than internet, electricity, mobile phones, or pcs. a lot of policymakers understand from the technology perspective that is important we have regulatory framework that encouraged u.s. to be a leader in this space. >> when we saw cz tweeting over the weekend he said part of this was he could not support someone lobbying against him. we could hear about that, ftx is not looking for the -- looking up for the industry. quickly explained in less than a minute, what happened? guest: it does appear there was some crypto politics at play as well. you are seeing the same things i am seeing. the crypto exchange market has always been very cutthroat and

very competitive. did that play a hand in the unraveling this week? it is very possible. >> we have to leave it there, thank you very much for joining us, of the chamber of digital commerce, thank you personally bostick for joining us this hour. if you cannot get enough of crypto check out our daily luber crypto podcast, look at that -- check out our crypto podcast look for every week every get your podcasts. this is bloomberg. ♪

>> this is "bloomberg crypto," i am matt miller with kailey leinz. 14 years ago i got off a plane in german area, september 15, 2008, turned on my blackberry to see lehman brothers collapsed.

the same thing happened to me on tuesday, i got a faith flight -- a flight from jfk and turned on my iphone, i saw this ftx, my mind was blown. >> no one saw this coming, ftx was a white knight, saving everyone else now he finds himself in the position of needing to be saved. he needs to raise billions of dollars in funding to rescue ftx. justin son has been in talks for the amounts, it will be extinct see how this evolves, it cannot get it done what to the ripple effects look like? it is a moment of contention for this industry. matt: i am focused on something they were talking about, if alameda wines down, -- winds down, what does the counterparty exposure look like? how long do those ripples cascade? it could be very bad. rhino does not look like a total catastrophe to bring marcus down, we are still rallying very

-- markets down, we are still rallying very hard in traditional finance. >> a lot of it has to do with the cpi, will be back in our normal time tuesday, 1 p.m. eastern time, right here on bloomberg. ♪ we all have a purpose in life - a “why.” no matter your purpose, at pnc private bank we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

>> now keeping you updated with your word news from around the world this is the first word i am mark crumpton. the head of the epa says the war in ukraine should not cause a lot of delay when it comes the transition to green energy. michael regan spoke to bloomberg from the climate change summit in egypt. >> we find ourselves in this session, where many countries are over -- overly reliant on fossil fuels provided by countries like russia at a time where it is inconvenient. we are seeing this unprovoked war with ukraine is causing pain globally.