Senator Elizabeth Warren of Massachusetts issued a warning about the “high opacity and volatility” risks of investing in cryptocurrencies, saying that its lack of supervision is “unsustainable.”
Warren, Chairman of the Economic Policy Subcommittee of the Senate Banking Committee, Sent a letter Addressing the chairman of the Securities and Exchange Commission, Gary Gensler, on Wednesday, he laid the foundation for legislation to regulate the popular and growing financial markets.
Warren posed several questions to Gensler in the letter and stated that she needed to get an answer before July 28.
“Do you think that cryptocurrency exchanges currently operate in a’fair, orderly and efficient’ manner? If not, what problems did the SEC find related to the use of these exchanges?” she asked.
Warren is a long-time critic of Bitcoin. In an interview with CNBC in March, she described the popular cryptocurrency as “speculative in nature, and will end badly.”
She pointed out the unstable nature of digital currencies.
“Although the demand for cryptocurrencies and the use of cryptocurrency exchanges have soared, the lack of common sense regulations has left ordinary investors at the mercy of manipulators and fraudsters,” Warren said.
“These regulatory loopholes endanger consumers and investors and undermine the safety of financial markets. The US Securities and Exchange Commission must make full use of its power to deal with these risks, and Congress must step in to fill these regulatory loopholes.”
Warren stated that cryptocurrency platforms lack basic protections, noting that nearly 7,000 people have reported cryptocurrency fraud totaling $80 million, warning that the lack of regulation to protect investors is unsustainable.
Warren cited comments by Dan M. Berkovitz, Commissioner of the Commodity Futures Trading Commission.
“In a pure’point-to-point’ DeFi system… [t]There is no intermediary to monitor fraud and manipulate the market, prevent money laundering, protect deposited funds, ensure counterparty performance, or complete customer integrity if the process fails. A system without an intermediary is a Hobbes market, where everyone is looking for themselves. Warn buyers-‘Let buyers beware,'” Berkowitz said.
Cryptocurrency reached a record $2 trillion in April, and Visa recently announced that it spent more than $1 billion in cryptocurrency in the first six months of 2021.
Among other experts, financial technology editor James Ledbetter described Bitcoin as “a highly volatile and risky investment.”
Finance Minister Janet Yellen has stated that cryptocurrency poses a risk to financial stability and believes that it is necessary to strengthen supervision to protect consumers.