At the U.S. Senate Banking Committee hearing Tuesday, Senator Elizabeth Warren called on the chairman of the Securities and Exchange Commission (SEC), Gary Gensler, to increase oversight of cryptocurrency. She raised numerous issues she connects with cryptocurrency that might harm little financiers.
Senator Elizabeth Warren Says ‘There’s a Whole List of Problems With Crypto’
U.S. Senator Elizabeth Warren questioned U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler about several issues regarding cryptocurrency at the Senate Banking Committee hearing Tuesday.
The senator from Massachusetts started by keeping in mind that last Tuesday, “In a matter of hours, $400 billion in market value disappeared.” She then pointed out that as the prices of cryptocurrencies tumbled, “several of the biggest crypto exchanges had outages, which kept customers from making withdrawals or trades.”
Questioning how this impacts little retail financiers, “who don’t have a lot of money to lose,” Warren explained a theoretical circumstance. “Let’s say that last Monday I took out the last sliver of my savings. I went on the crypto exchange Coinbase. I bought $100 worth of ether. Then I woke up early on Tuesday morning, I saw that the market looked like it was beginning to tank, and I thought I better sell right now,” she stated, including:
But when I tried to sell, Coinbase, the exchange, was down. So, Chair Gensler, existed anything I could do to get my cash out?
Gensler replied: “Not at a federal agency because they [Coinbase] haven’t yet registered with us, even though they have dozens of tokens that may be securities.”
Senator Warren then explained another theoretical circumstance. “Instead of buying ether on Coinbase last Monday, I decided instead to put that $100 towards buying a new, cool token — let’s call it ‘new coin’ — that was being hyped on Twitter,” she detailed. “New coin is available only on a ‘decentralized’ crypto exchange, so to buy it I had to pay a fee, about $20, to the crypto miners who processed the transactions …Then of course I woke up on Tuesday morning and the market was tanking.”
She asked Gensler just how much she would have to pay the exchange to offer her coins and return into dollars quick, mentioning:
How much would I have to pay to get out of defi on Tuesday to sell my coins. Would I have had to pay a 2nd $20 charge or might I have had to pay much more?
The SEC chairman promptly replied, “I don’t know because it will be all in the user agreement.” He included that numerous platforms “are only decentralized in name only,” pointing out that “There is a user agreement. There’s something you are doing with this platform. There’s a governance token. There’s usually some fees.”
While the SEC chairman mentioned that he does not understand what charge a specific exchange charges, Senator Warren raised network fees.
“We do know some of the fees from last Tuesday. The fee to swap between two crypto tokens on the Ethereum network was more than $500, obviously way more than the $100 I was trying to trade in the first place,” she exclaimed, keeping in mind:
The question I have is, in the face of these high, foreseeable fees, little financiers might quickly get jammed and eliminated completely.
Senator Warren then asserted that cryptocurrency is not a path to financial inclusion. “Chair Gensler, advocates say crypto markets are all about financial inclusion. But the people who are most economically vulnerable are the ones who are most likely to have to withdraw their money the fastest when the market drops. Does this sound like a path to financial inclusion to you?”
Gensler replied: “It’s a highly speculative asset class. It doesn’t sound like the path that you mentioned.”
Warren continued:
There’s an entire list of issues with crypto: undependable tech, frauds, ravaging environment effect. But high, unpredictable fees can make crypto trading really dangerous for people who aren’t rich.
She concluded, “Regulators need to step up to address crypto regulatory gaps,” stressing, “Chair Gensler, I expect you and the SEC to take a leading role in getting this done.”
