U.S. Senator Elizabeth Warren says, “Too many crypto companies are able to scam customers, leaving ordinary investors holding the bag while insiders make off with their money ” she stated. She stressed the need for stronger rules and urged the Securities and Exchange Commission (SEC) and Congress to take action on regulating crypto.
U.S. Senator Says Crypto Needs Stronger Regulation
U.S. Senator Elizabeth Warren (D-MA) expressed concerns about cryptocurrency investments in an interview with Yahoo Finance Live last week after several crypto companies filed for bankruptcy protection.
Calling for the U.S. Securities and Exchange Commission (SEC) to act, she stressed.
Congress needs to act, but the SEC is responsible for using its authority to put up guardrails and crack down on crypto actors who break the rules.
“I have been sounding the alarm about crypto and the need for stronger rules to protect consumers and financial stability,” the senator added.
Last week, crypto lender Celsius Network filed for bankruptcy protection after freezing its withdrawals. A week ago, another crypto lender, Voyager Digital, filed for bankruptcy protection. The company cited crypto market contagion and a loan default by bankrupt crypto hedge fund Three Arrows Capital as reasons.
Too many crypto firms are able to scam their customers, and insiders are making off with their money, while public investors are left holding the bag.
SEC Commissioner Hester Peirce expressed concern in May that the securities watchdog had dropped the ball on cryptocurrency regulation. “We can pursue fraud, we can play a more active role in terms of innovation, but we need to get to it and we need to start working … I don’t see us ever wanting to do that work,” she opined.
SEC Chairman Gary Gensler has been criticized for taking an enforcement-centric approach to crypto regulation; in May, the securities watchdog said it would nearly double the size of the enforcement division’s crypto unit. Last week, Gensler outlined what investors can expect from the SEC in terms of crypto regulation.
Senator Warren has pressured Gensler to increase crypto oversight on several occasions. Last July, she warned of the growing risks of cryptocurrency trading and urged securities regulators to “use their full authority to address these risks.” She also said decentralized finance (defi) is the most dangerous part of crypto and urged regulators to crack down on stablecoin 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 troubled the Department of Labor. Ali Kawal, acting assistant secretary of the Department of Labor’s Employee Benefits Security Administration, said he has “grave concerns about what Fidelity has done.” The congressman also repeatedly bashed the environmental impact of bitcoin.
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