Senator Elizabeth Warren says Defi is one of the shadiest parts of crypto and that more regulation is needed especially towards decentralized finance and stablecoins, as they pose more risks to consumers. In our altcoin latest news today, we are taking a closer look at the senator’s fears.
Senator Elizabeth Warren says that more regulation is needed as she stepped into the limelight for her comments on the DeFi space and the role of stablecoins in the industry. Speaking during a Senate Committee on Banking, Housing, and Urban Affairs, Warren described stablecoins as the lifeblood of the Defi system because they are used to trade between different coins and can lend and borrow money outside of the regulated baking system.
Stablecoins pose risks to consumers & to our economy. They’re propping up one of the shadiest parts of the crypto world, DeFi, where consumers are least protected from getting scammed. Our regulators need to get serious about clamping down before it is too late. pic.twitter.com/hMOT1HIQgn
— Elizabeth Warren (@SenWarren) December 14, 2021
Stablecoins are cryptocurrencies that are pegged 1:1 to fiat currencies such as the US dollar which means unlike BTC or other crypto assets, their prices should remain steady. Warren however stated that stablecoins pose risks to consumers and the economy because they are one of the shadiest parts of crypto because consumers are least protected from scams.
According to Warren, Defi is where the regulations don’t imply and it is also where the scammers and malicious actors mix among real investors and first-time crypto traders:
“Our regulators need to get serious about clamping down before it is too late.”
At the same hearing, Warren’s fellow party member Senator Sherrod Brown said stablecoins are magic money and said that they are not decentralized and transparent. He warned:
“If you put your money in stablecoins, there’s no guarantee you’re going to get it back.”
Janet Yellen. Source Forbes
Senator Warren’s comments on Defi as well as stablecoins are just one in the line of her ongoing criticism of the crypto industry. Warren sent a letter to Treasury Secretary Janet Yellen and asked for greater oversight of the crypto industry:
“All the warning signs are flashing. The hype, the volatility, the wild claims that turn out to be false. As the crypto market grows, so do the risks to our financial stability and our economy.”
In line with the climate change narrative, Warren also trashed BTC mining company Greenidge Generation as she raised concerns about the impact on the environment. Before that, she stated that one of the easiest and least disruptive things we can do is to fight the climate crisis by cracking down on environmentally draining cryptocurrencies.