Senator Elizabeth Warren calls cryptocurrency the “new shadow bank”

US Senator Elizabeth Warren, considered one of the US authorities’ most prominent cryptocurrency skeptics, has referred to the crypto trade as the “new shadow bank.”

In a Sept. 5 interview with the New York Times, Warren stated that the crypto trade provides “many of the same services” as shadow banking; however, it lacks “consumer protection or financial stability to support the traditional system.”

Warren expressed concern about the quickly rising market for stablecoins, a cryptocurrency whose worth could be pegged to the price of different belongings, together with fiat currencies like the US greenback, the euro, or commodities like gold.

The Senator stated it was “worth considering” banning US banks from holding reserves to help private stablecoins, a transfer that “could effectively end the rising market.”

According to Statista and CoinMarketCap, the complete market capitalization of stablecoins like Tether (USDT) and USDC Coin (USDC) has soared from around $ 37 billion in this year January to $ 123 billion at press time. Significant accumulations of stablecoins have been extensively seen as an indicator of the buying energy of cryptocurrency like Bitcoin (BTC). The tightly associated stablecoins permit retailers to deposit funds throughout platforms to purchase and promote cryptocurrency.

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Warren’s current feedback comes as world monetary regulators pay extra consideration to stablecoins like USDT. According to online reviews, the Ontario Securities Commission not too long ago banned USDT trading providers from Canada’s first two registered crypto exchanges, Wealthsimple and Cranberry. In mid-July, US Treasury Secretary Janet Yellen requested the tax authorities to create an acceptable regulatory framework for stablecoins.