U.S. Senator Elizabeth Warren has asked Treasury Secretary Janet Yellen to “act with urgency” and adopt an appropriate policy to address the risks posed by cryptocurrencies. “The longer that the United States waits to adapt the proper regulatory regime for these assets, the more likely they will become so intertwined in our financial system that there could be potentially serious consequences if this market comes under stress.”
Senator Warren Wants Quick Regulatory Response to Crypto Risks
U.S. Senator Elizabeth Warren wrote a letter to Treasury Secretary Janet Yellen Monday outlining numerous concerns regarding the risks posed by cryptocurrency.
“I am writing to you in your capacity as Chair of the Financial Stability Oversight Council (FSOC) regarding the need for a coordinated and cohesive regulatory strategy to mitigate the growing risks that cryptocurrencies pose to the financial system,” Warren wrote.
She explained that the FSOC “is responsible for identifying and responding to emerging risks to financial stability.” The senator from Massachusetts described:
I have become increasingly concerned about the dangers cryptocurrencies pose to investors, consumers, and the environment in the absence of sufficient regulation in the United States.
She then raised concerns that “the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system.” She proceeded to outline some risks cryptocurrencies pose to the U.S. financial system, hedge funds, and other investment vehicles, including risks to banks, cyber attacks, and risks unique to stablecoins and decentralized finance (defi).
“The council must determine whether these trends raise concerns beyond investor and consumer protection and extend to broader systemic vulnerabilities that could threaten financial stability,” Warren emphasized. “It is essential that the policy response to the risks posed by these assets is coordinated and holistic, rather than fragmented amongst individual financial agencies.”
Senator Warren also proposed that the FSOC “take a leading role in developing a comprehensive regulatory regime for cryptocurrencies.”
She wrote, “I urge FSOC to act with urgency and use its statutory authority to address cryptocurrencies’ risks and ensure the safety and stability of our financial system,” warning:
The longer that the United States waits to adapt the proper regulatory regime for these assets, the more likely they will become so intertwined in our financial system that there could be potentially serious consequences if this market comes under stress.
Earlier this month, Senator Warren called on the U.S. Securities and Exchange Commission (SEC) to “use its full authority” to address cryptocurrencies risks, emphasizing that “Congress must also step up to close these regulatory gaps.”
What do you think about Senator Warren asking Treasury Secretary Yellen to take action urgently to mitigate cryptocurrency risks? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
