U.S. Democrat Senator Elizabeth Warren and a member of the Senate Banking Committee has sent a letter to Treasury Secretary Janet Yellen on the subject of stemming risks associated with cryptocurrencies.
The letter, sighted by CNBC, was addressed to Yellen per her role as the chair of the Financial Stability Oversight Council (FSOC). The nudging seeks to press on other members of the committee who are also market regulators to create a framework through which the broader department of the government will interact with the crypto ecosystem.
“FSOC must act quickly to use its statutory authority to address cryptocurrencies’ risks and regulate the market to ensure the safety and stability of consumers and our financial system,” the Massachusetts Democrat congresswoman wrote in a letter to Yellen. “As the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system, consumers, the environment, and our financial system are under growing threats.”
Digital currencies have come to stay. However, the threats they pose gives regulators and government stakeholders a major concern. From the embrace of Bitcoin (BTC), Ethereum (ETH), and stablecoins in payment systems to the threats to the banks posed by decentralised finance (DeFi), regulators want the crypto ecosystem to come under the same or related regulations other market sectors face.
Warren highlights major risks that cryptocurrencies pose, including exposure to hedge funds that lack transparency, the threats from Stablecoins, and the use of digital currencies in cyberattacks. These, the lawmaker believes the FSOC can help forestall drawing strength from its composition or membership, including veterans from the Securities and Exchange Commission (SEC), the Federal Reserve, and the Commodities Future Trading Commission (CFTC).
However, the clamour for crypto regulation has advised not to be used as leverage to remove strangle financial innovation on American shores. Senators Pat Toomey of Pennsylvania and Cynthia Lummis of Wyoming are amongst the proponents of this latter position.
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