U.S. Senator Elizabeth Warren says that “too many crypto firms have been able to scam customers and leave ordinary investors holding the bag while insiders make off with their money.” She stressed the need for stronger rules, urging the Securities and Exchange Commission (SEC) and Congress to take action on crypto regulation.
U.S. A Senator Says that Crypto needs Stronger Regulation
U.S. U.S. Senator Elizabeth Warren (D.MA) expressed her concern about cryptocurrency investment in an interview with Yahoo Finance Live last Wednesday after several crypto companies filed for bankruptcy protection.
Her appeal to the U.S. Securities and Exchange Commission, (SEC), for action was clear:
Congress must act. However, the SEC is responsible for using its authority to place guardrails and take down crypto-criminals who break the rules.
“I’ve been ringing the alarm bell on crypto and the need for stronger rules to protect consumers and financial stability,” the senator added.
Celsius Network, the crypto lender, filed bankruptcy protection this week after freezing all withdrawals. Voyager Digital was another cryptocurrency lender that filed for bankruptcy protection one week before. The company cited contagion in crypto markets and bankrupt crypto hedge fund Three Arrows Capital‘s loan default as the reasons.
Warren stressed:
Many crypto companies have managed to con customers, leaving ordinary investors with nothing and making money for the insiders.
Hester Perce, SEC Commissioner expressed her concern that the watchdog for securities has failed to properly regulate cryptocurrency. “We can go after fraud and we can play a more positive role on the innovation side, but we have to get to it, we’ve got to get working … I haven’t seen us willing to do that work so far,” she opined.
Gary Gensler is the Chairman of the SEC. He has been accused for adopting an enforcement-centric view to crypto regulation. In May, the securities watchdog said it will almost double the size of its enforcement division’s crypto unit. Gensler provided an overview of what investors should expect from the SEC regarding crypto regulatory issues last week.
On several occasions, Senator Warren has pressed Gensler for greater crypto supervision. In July last year, she warned of the growing risks of cryptocurrency trading, calling on the securities regulator to “use its full authority to address these risks.” She also said decentralized finance (defi) is the most dangerous part of crypto, urging regulators to clamp down on stablecoins and defi platforms “before it is too late.”
In May, she demanded answers from financial services firm Fidelity Investments regarding the company’s decision to allow bitcoin investments in 401K plans. Fidelity’s move has troubled the Labor Department. “We have grave concerns with what Fidelity has done,” said Ali Khawar, Acting Assistant Secretary of the Labor Department’s Employee Benefits Security Administration. The senator has also repeatedly bashed bitcoin’s environmental impact.
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