Elizabeth Warren, the US Senator, said that there are a number of crypto companies out there that scam their clients. She said that these companies make off with the money from investors who are left holding the bag. Therefore, the senator said that there was an urgent need to develop stronger rules for the crypto space. She urged Congress and the US Securities and Exchange Commission (SEC) to speed up the crypto regulation process.
Crypto investing concerns
The Democrat senator shared her concerns regarding crypto investments last week in an interview after a number of companies in the market had filed for bankruptcy. She emphasized that the SEC needed to take action right away.
She asserted that while Congress should also act, it is the responsibility of the SEC to leverage its authority to put a stop to crypto actors who are breaking the rules. The senator said that she had been sounding the alarm bell for a while now and had called for stronger rules to protect customers and ensure financial stability.
Last week, crypto lending company Celsius Network had become the latest one to file for bankruptcy, just a month after it had frozen withdrawals on its platform. A week before that, another lending company called Voyager Digital had filed for bankruptcy. This company has said that there was an ongoing contagion in the crypto space and the loan default of crypto hedge fund Three Arrows Capital had pushed it over the edge.
The hedge fund itself had also filed for bankruptcy a week before. Warren stated that there were just too many crypto companies that were able to get away with scamming their clients and taking off with their money.
Back in May, Hester Peirce, the SEC Commissioner, had shared concerns about dropping the ball on crypto regulation. She said that they could target fraud and could take a more positive stance towards innovation, but they need to focus on regulation, which they have not done so far.
The chairman of the SEC, Gary Gensler, had also received criticism for avoiding an enforcement-centric approach to regulate the crypto market. The securities watchdog had said in May that they were planning on doubling their crypto unit’s enforcement division.
In the previous week, the SEC boss had also outlined what the markets could expect from the regulatory authority in regard to crypto regulation.
It should be noted that this is not the first time that Senator Warren has called upon the SEC to step up their crypto regulation. Last year in July, she issued a warning about the risks associated with crypto trading. She had urged the securities regulator to use its authority for addresses these risks. She had also referred to decentralized finance (DeFi) as the most dangerous aspect of crypto and had also urged regulatory authorities to take action against DeFi platforms and stablecoins before it was too late. She had also been concerned about the introduction of bitcoin investments in 401K plans by Fidelity Investments.