US Senator Elizabeth Warren warns of crypto risks and urges SEC for answers

In a letter to Secretary of the Securities and Exchange Commission (SEC) Gary Gensler, Senator Elizabeth Warren said she needed replies from Gensler by July 28 in order to validate the SEC’s authority to protect consumers in Invest and trade cryptocurrencies, protect and take the necessary measures of Congress in the future, reported Reuters.

U.S. Senator Elizabeth Warren warns of crypto risks as she urges the SEC for answers

US Senator Elizabeth Warren warned on Thursday of the growing risks the “unclear and volatile” cryptocurrency market poses to consumers and financial markets, saying that its lack of regulation is unsustainable.

In a letter to SEC chairman Gary Gensler on Wednesday, Senator Elizabeth Warren asked the agency to answer a series of questions about regulating cryptocurrencies – and said she expected answers by July 28th at the latest.

The Massachusetts Democrat – chairman of the Economic Policy Subcommittee of the Senate Banking Committee – aims to protect investors in the open digital currency market.

“The increased use of cryptocurrency exchanges poses unique risks for consumers,” Warren said in the letter. “Although they refer to themselves as crypto exchanges, these platforms lack the same basic types of regulatory protection as traditional national exchanges like the New York Stock Exchange or Nasdaq.”

Warren said the information she requested will help Congress determine if it needs to act to ensure the SEC has the authority it needs to address current regulatory loopholes. These vulnerabilities leave investors and consumers vulnerable, she said, in what she calls an opaque and volatile market.

The cryptocurrency hit a record market cap of $ 2 trillion in April, but U.S. market regulators remain patchy.

Warren said in a statement: “While the demand for cryptocurrencies and the use of crypto exchanges has skyrocketed, the lack of customary regulations has placed the casual investor at risk of manipulation and fraud.

These regulatory loopholes put consumers and investors at risk and undermine the security of our financial markets. The SEC must address these risks at its own discretion, and Congress must also act to address regulatory loopholes. “

Warren also said in his letter that between October 2020 and March 2021, nearly 7,000 people in the United States reported $ 80 million in losses to crypto fraud.

“The harm to consumers from this highly regulated market is real and will only increase without effective SEC regulations,” she said.

Warren asked the SEC five questions starting with:

“Do you think that crypto exchanges are currently ‘fair, orderly and efficient’? If not, what problems has the SEC identified with the use of these exchanges? “

The crypto market has hit several milestones this year, including exceeding a $ 2 trillion valuation in April when Bitcoin surpassed a market value of $ 1 trillion. These steps were taken in connection with the launch of Coinbase, the largest cryptocurrency exchange in the United States. Wall Street banks and other institutions have stepped up their business in the market. Meanwhile, the SEC is considering the introduction of 13 Bitcoin ETFs.

But the valuation of the crypto market has since fallen to around $ 1.4 trillion due to the sell-off of Bitcoin, Ether, and other digital currencies.

“The lack of basic investor protection rules is unsustainable,” she added.

US Senator Elizabeth Warren warns of crypto risks as she urges the SEC for answers – SEC and Gensler are moving

SEC spokesmen and Gensler did not immediately respond to a request for comment on Wednesday evening.

Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen have warned that cryptocurrencies pose a risk to financial stability and suggested that tighter regulation may be warranted.

Officials from the Group of 20 Great Economies are also expected to discuss the issue when they meet in Venice later this week.

Gensler, who became chairman of the SEC in April, previously said that cryptocurrencies should be built into the financial management system but has yet to propose new rules.

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