Senator Elizabeth Warren is urging US regulators and Congress to respond to the growth of cryptocurrencies.
“Right now, we don’t have any cops on the beat to speak of,” said Warren, a Massachusetts Democrat, in an interview with Bloomberg.
“So long as it’s an unregulated system, you may be pulling more people in so that they can get cheated, and that’s not what we want.”
While the senator does see positives for the technology behind crypto assets in potentially providing a solution for “unbanked” who are required to pay high fees to cash their checks, Warren also said regulations need to be stepped up to avoid any possible systemic risks.
“The bigger it gets and the more it stays outside the financial system — something goes wrong, there’s a run on crypto, or elsewhere in the economy, I don’t want the U.S. taxpayer to be the one that gets called on to back this up.”
Warren further pointed to pump and dump schemes that are illegal but often not punished due to unclear oversight on the industry.
Her comments follow US Securities and Exchange Commissioner (SEC) Chair Gary Gensler talking about bringing more crypto enforcement actions on the market, which he said is rife with manipulation and fraud.
He called for Congress to give the SEC the power to oversee crypto exchanges, which are not within the SEC’s authority, along with crypto lending, decentralized finance.
Gensler also said that many tokens, not just crypto assets but also stablecoins and derivatives, may fit the definition of securities that fall under existing US laws.
However, it’s not just the Fed, IRS, and SEC after crypto, but other agencies like CFTC wants a piece of the pie as well.
“Just so we’re all clear here, the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil….or crypto assets,” tweeted CFTC Commissioner Brian Quintenz on Wednesday.
Quintenz also retweeted several tweets regarding crypto, including one from the House Committee On Agriculture that said, “crypto is bigger than the SEC. Congress needs to write the rules of the road to protect investors AND innovation in the digital economy.”
Quintenz seems to be more interested in and concerned about DeFi.
Last week, in response to Warren talking about the need to regulate crypto before many small investors get entirely wiped out, Quintenz said that CFTC has already extensively used its authority over outright crypto token fraud. It’s the decentralized systems with full transparency of open source code that “significant(ly) reduce information asymmetries.” He said at the time,
“The competition-innovation cycle occurring in defi, powered by almost zero barriers to entry and total transparency (both unprecedented in the traditional financial system), is incredible to watch. But CFTC must stay vigilant at prosecuting outright fraud.”