U.S. Senator Elizabeth Warren is the Subcommittee on Economic Policy of the Senate Banking Committee. She warned about the increasing risks from the cryptocurrency market. She also criticised the SEC’s lack of regulatory oversight for crypto.
Reuters quoted her as saying that ‘while demand for cryptocurrencies has skyrocketed and the use cryptocurrency exchanges have increased dramatically, the absence of common-sense regulations leaves ordinary investors at mercy of manipulators, fraudsters and other criminals’. She went on:
These regulatory gaps are dangerous for investors and consumers, and they also pose a threat to the financial market’s safety. These risks must be addressed by the SEC, which must exercise all its authority. Congress must also take action to close these regulatory gaps.
On Wednesday, Senator Warren wrote a letter to Gary Gensler, the Chairman of the SEC, informing him about her concerns regarding the risk involved with the cryptocurrency market. She stressed that cryptocurrency trading platforms lack the same protections as traditional exchanges.
Senator cited Federal Trade Commission data that showed nearly 7,000 individuals reported losses of $80 million from cryptocurrency scams during the six-month period to March.
Gensler was a professor at MIT who taught classes about crypto and blockchain. In May, confirmed him as the new chairman of the SEC. Although Gensler has stated previously that cryptocurrency exchanges need more regulation, he has not yet proposed new rules.
He stated that “this is a very volatile, one might even say highly volatile asset class and the investing public would benefit by more investor protection on crypto exchanges,” in May.
Warren wanted Gensler’s explanation of how cryptocurrency exchanges could undermine the mission of the SEC, whether additional investor protections were necessary, and whether international regulatory coordination is required. She stated:
It is impossible to sustain the absence of regulation that provides basic investor protections.
Gensler was informed by Senator Warren that she needs answers from him on July 28th regarding the SEC’s authority for protecting consumers trading and investing in cryptocurrencies. Gensler also requested information about future congressional actions.