US Senator Elizabeth Warren has described the lack of cryptocurrency regulation as “unsustainable”, warning that consumers are being put at risk by “highly opaque and volatile” cryptocurrency market.
Warren raised her concerns in a letter to SEC Chair Gary Gensler on Thursday, demanding answers by July 28 on the SEC’s authority to protect consumers investing and trading in cryptocurrencies, in order to help determine what future congressional action may be needed, according to Reuters.
A former Democratic presidential candidate who chairs the Senate Banking Committee’s Subcommittee on Economic Policy, Warren has previously made a mark by calling out Big Tech monopolies, and her comments are widely seen as an attempt to lay the groundwork for legislation to regulate the fast-growing crypto market.
Cryptocurrencies reached a record capitalization of $2 trillion in April, but US regulation of the crypto market remains patchy.
“While demand for cryptocurrencies and the use of cryptocurrency exchanges have skyrocketed, the lack of common-sense regulations has left ordinary investors at the mercy of manipulators and fraudsters,” Warren said.
“These regulatory gaps endanger consumers and investors and undermine the safety of our financial markets. The SEC must use its full authority to address these risks, and Congress must also step up to close these regulatory gaps.”
Cryptocurrency crimes have increased 12-fold since 2016, according to recent findings, and the Federal Trade Commission also recently warned that cryptocurrency scams have escalated dramatically in the last six months.
Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen have suggested heavier regulation of cryptocurrencies, warning that they pose a risk to financial stability.
In Senator Warren’s letter to the SEC chair, reviewed by Reuters, the high-profile senator said cryptocurrency platforms lack the same basic protections as traditional exchanges. She noted that nearly 7,000 people reported a combined $80 million in losses from cryptocurrency scams in the six months to March 2021.
Warren asked Gensler to outline the ways in which cryptocurrency exchanges may be undermining the SEC’s mission to ensure that markets are operating fairly, and whether additional protections for investors are needed.
