Earlier in July this year, the US Senator for Massachusetts and member of the Senate Committee on Banking – Elizabeth Warren, called upon the necessity for tighter regulations for cryptocurrency in the US. On Monday, most probably on 26th July 2021, Sen. Warren wrote a letter to the Financial Treasury Secretary Janet Yellen for her to use the power of her position to “act with urgency” to formulate tighter cryptocurrency regulations for the US.
Elizabeth Warren Writes To Janet Yellen Regarding Cryptocurrency Regulations In The US
US Senator and financial critic, Elizabeth Warren formerly wrote a letter to the Securities and Exchange Commission (SEC) asking them the reasons for the inefficiency in cryptocurrency regulations in the United States. Recently, she wrote to the Treasury Secretary Janet Yellen asking her to use the powers over the Financial Stability Oversight Council (FSOC). They share a similar stance regarding the urgent need for tighter cryptocurrency regulations in the US. In the letter, Warren asked Yellen to identify the risks posed on the nation by the use of cryptocurrencies and take effective actions to bring about compliance with the needs of the national financial stability and security.
Warren wrote in the letter addressed to secretary Janet Yellen, “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.”
“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 Senator from Massachusetts seems to emphasize the role of the treasury secretary over FSOC in this arena. The explanatory tone mentions that the FSOC must urgently identify the risks and find a cure for them before it’s too late.
“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 continues by stating the current situation of cryptocurrency in the US by writing, “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.”
She points out certain pre-lingering risks already existing to cause financial instability. Such as the banking risks if they get involved in cryptocurrency, the potential threat caused by stable coins, hedge funds, non-transparency in the financial procedures included in investing and trading cryptocurrencies, the decentralized nature of finance &c.
“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”. Later adds to this, “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.”
The continuous tone of a reminder of the actions FSOC ought to take is apparent as we see she wrote that the institution should “take a leading role in developing a comprehensive regulatory regime for cryptocurrencies.”
“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’.”
Just around the corner of this letter being penned down, Warren also held a meeting with other senators and lawmakers. The hearing was titled “Cryptocurrency: What are they good for?”
Now besides the facts and figures discussed and openly declared here, I am interested in the fact that considering the age group of these respected senators raising the alarm of the risks imposed by cryptocurrency, is it possible that this could be exaggerated? The youth and young market experts seem to incur these risks with an acknowledgeable amount of knowledge in this field. A few weeks ago, UK’s banking official mentioned that “cryptocurrencies aren’t big enough to create financial instability in a country”. So, the question lies here: are the old-school fundamentals being imposed here, or are these “threats” legitimate?