Elizabeth Warren presses Janet Yellen, regulators to address ‘growing threats’ in crypto market
“Cryptocurrencies and other digital assets do pose significant risks currently, and the risks they pose increase as they permeate the traditional financial system and more and more people invest,” Walch told lawmakers in written testimony. Her Twitter biography advises readers to “own no crypto.”
Warren’s letter is the latest in a recent string of calls from Capitol Hill for stricter market regulation.
Perhaps the highest-profile example came in February, when lawmakers in both parties peppered executives from brokerage Robinhood, social media website Reddit, market maker Citadel Securities and video-game retailer GameStop over the “gamification” of stock trading.
Regulating crypto markets has proven trickier, however, given the sheer number of assets and the novelty of the technology behind digital currencies. To date, it remains unclear which body — the FSOC, the Securities and Exchange Commission, or Congress itself — will ultimately bear responsibility for the day-to-day oversight of crypto trading.
That’s likely why Warren addressed her letter to Yellen in her role on the FSOC.
Created in the wake of the 2008 financial crisis, the FSOC is chaired by the Treasury secretary and brings together 10 federal financial regulators, including the Federal Reserve, Securities and Exchange Commission, and Commodities Future Trading Commission.
The FOC’s job is to identify risks to the financial industry and coordinate a regulatory response across Cabinet departments and other agencies, since no single regulator is responsible for monitoring and addressing overall risks to financial stability.
The SEC, under the new leadership of Chair Gary Gensler, is weighing whether to approve exchange-traded funds that track the performance of bitcoin. Many investors say that decision can’t come soon enough given bitcoin’s recent rally and the extensive amount of futures and other derivatives trading in the space.
To date, Gensler has said that investor protections should apply to crypto exchanges. The Federal Reserve is weighing whether to issue a central bank digital currency.
Republicans on the Senate Banking Committee, including ranking member Pat Toomey of Pennsylvania and Cynthia Lummis of Wyoming, argue that Congress should better understand the potential uses of cryptocurrencies while keeping illicit activity in check.
Toomey and Lummis are exploring the value and possible applications of so-called stablecoins, or digital currencies pegged to national currencies like the U.S. dollar.
“It’s important to note that people have raised legitimate issues about cryptocurrencies,” Toomey said in prepared remarks Tuesday. “But we shouldn’t lose sight of the tremendous potential benefits that distributed ledger technology offers.”
“We should also be mindful that private innovation has enabled most of these developments,” he added. “We should not suppress the concepts of individual entrepreneurship and empowerment that have made this innovation possible.”
— CNBC’s Stephanie Dhue contributed to this article.
Article source: https://www.cnbc.com/2021/07/27/elizabeth-warren-presses-yellen-financial-regulator-to-manage-crypto.html