Senator Elizabeth Warren called on US Treasury Secretary Janet Yellen to accelerate the development of regulation of the cryptocurrency industry in order to reduce the risks it poses to the financial system.
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letterto the US Treasury Secretary, Warren pointed out that stablecoins and decentralized finance pose a particular threat to banks. With the rapid development of the DeFi industry, services such as lending, borrowing and leveraged derivatives trading are being provided to users. At the same time, banks do not participate in these processes, which becomes a threat to them.
Given that the developers of DeFi projects and their contributors can remain anonymous, there are great risks of fraud. In addition, Warren mentioned the increasing hacker attacks on cryptocurrency projects.
“I am increasingly concerned about the risks that cryptocurrency traders and investors face in the absence of proper regulation in the US. However, the demand for cryptocurrencies continues to grow and they are already becoming part of the financial system. The government must act urgently and use its legal powers to eliminate the risks associated with cryptocurrencies, “- said in a letter from Senator Warren.
According to Warren, the under-regulated cryptocurrency market also poses a significant risk for hedge funds, which are increasingly investing in digital currencies. According to a survey by the Financial Times, hedge funds plan to place up to 7% of their assets in cryptocurrencies in the next five years. Earlier, Warren criticized bitcoin for the fact that its production requires a large amount of electricity, and this causes irreparable harm to the environment.
“Congress and federal regulators can no longer ignore cryptocurrencies in the hope that they will disappear. It will never happen. The longer the US waits to adapt cryptocurrency regulation, the more likely it is to become inextricably intertwined with the financial system. And if crypto assets are under pressure, this will have serious consequences for the entire financial market, ”said Warren.
Last week, the US President’s Financial Markets Working Group announced that it will publish guidelines for regulating stablecoins in the coming months.
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