As U.S. President Donald Trump said they were investigating the Binance attack, calls were made for Congress to pass legislation to oversee crypto exchanges and protect customer funds.
Following the $6.3 billion attack on Binance, the debate broadened from tracking the stolen assets to how crypto exchanges should be regulated in the United States. According to The Block, Donald Trump said at a press conference on Friday, October 30, that they were investigating the attack and repeated Binance’s statement that it had ensured customers recovered their funds.
Trump also raised security concerns about digital transactions, in which money does not physically change hands. On the same day, both the regulatory agency and crypto representatives called for clearer rules governing exchange operations.
Letter to Congress calls for customer funds to be protected
Cody Carbone, CEO of the Digital Chamber, called on Congress to act before the current session ends in a letter to leaders in the House of Representatives and Senate. At the center of the requests were granting the U.S. Commodity Futures Trading Commission (CFTC) authority to oversee crypto exchanges and keeping customer assets separate from company funds in bankruptcy proceedings.
Carbone argued that there are no workable, common standards for how platforms hold and segregate customer assets or protect them against cyberattacks. He said that under the current framework, regulators can intervene only after losses have occurred.
CFTC Chair Michael Selig, meanwhile, noted that Binance is not under the agency’s federal oversight. Arguing that unregulated exchanges outside the United States lack the protections found in the country’s financial markets, Selig cited the attack as an example of the need for new regulations. On October 5, the CFTC proposed a framework covering leveraged and margined retail crypto transactions and a new registration category for exchanges offering those products.
Disagreement over authority to freeze stolen funds
The attack also brought renewed attention to the Clarity Act, which passed the House of Representatives but has not advanced in the Senate. Senator Cynthia Lummis said the bill would provide legal protection to crypto companies that quickly freeze suspicious transactions reported by law enforcement.
Amanda Fischer, an executive at Better Markets, disagreed, arguing that stablecoin issuers would need a court order to freeze funds. Patrick Wilson, legal counsel at the Solana Policy Institute, said a provision in the bill protects voluntary, temporary freezes made on the basis of a reasonable suspicion of a legal violation from private lawsuits, and that no court order is required.
The debate was therefore not limited to exchange security; how quickly funds can be frozen during an attack and what legal protections companies have when taking such action also came to the fore. Binance had previously announced that it had set aside more than $6.34 billion in company funds to cover the losses.
Not investment advice.