US Senator Elizabeth Warren, on Tuesday, came up with the warning about the growing risk which is posing on the consumers and the financial markets. The crypto market is highly opaque and more volatile and is blasting its lack of regulation as the unsustainable one.
Warren, who is a Democrat, chairs the Senate Banking Committee’s Subcommittee on Economic Policy. She has put up her concerns in a letter to the Securities and Exchange Commission Chair, Gary Gensler. on Wednesday. She gave her effort, which could help in laying the groundwork for the legislation, regulating the faster-growing market.
The former presidential candidate said that she needed the answer from Gensler by 28th July on the authority of SEC to protect investing and trading of the consumers in cryptos. Also, she calls for determining the future of the congressional action, which is necessary.
Cryptocurrencies have reached the record of the capitalization mark of $2 trillion in April. But the oversight of the US in the market has been remaining patchy.
Warren said, “While demand for cryptocurrencies and the use of cryptocurrency exchanges have sky-rocketed, the lack of common-sense regulations has left ordinary investors at the mercy of manipulators and fraudsters.”
These regulatory gaps can endanger consumers and investors and can also undermine the safety of their financial markets. Thus, SEC must use its complete authority to address these risks. Congress must step up to close all regulatory gaps.
The spokespeople from the SEC and Gensler did not give the response immediately to the request for the comment on Wednesday evening. The Federal Reserve Chairman, Jerome Powell, and the Treasury Secretary, Janet Yellen, also warned about the risk of the cryptocurrency to the financial stability. It suggested greater regulations that may be warranted. The officials from a group of 20 major economies had also discussed the issue when they met in Venice this weekend.
Gensler said that cryptos should be incorporated into the financial regulatory system. It needs to propose new rules. In her letter to Gensler, Warren said the crypto platforms are lacking the basic protections as there are $80 million of losses from crypto scams in the previous six months.
The demand for cryptos has surged from the past year with Coinbase. It is reporting that the first quarter is trading near the volume of $335 billion.
Warren asked Gensler to outline how crypto exchanges can undermine the mission of the SEC to ensure that the markets are operating fairly. Additional protections are needed for investors, and also coordination with the international regulation is needed.
“The lack of regulation to provide basic investor protections is unsustainable,” she added.