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Summary
- US Senator Elizabeth Warren has pressed the Securities and Exchange Commission (SEC) to bring the cryptocurrency market under its regulations.
- Bitcoin was down six per cent on Thursday, July 8, led by Warren’s anti-crypto stance.
- Crypto purists have called it a “blind” approach, which ignores the potential of blockchain technology.
US Senator Elizabeth Warren reiterated her concerns regarding cryptocurrencies on Thursday, July 8, pointing at the rising threats they pose at investors and financial institutions.
In a letter to the SEC chairperson Chair Gary Gensler, Ms Warren raised her concerns about electricity-hungry and environmentally disastrous” cryptocurrency mining operations.
Ms Warren also pressed on the US Securities and Exchange Commission (SEC) to take stringent actions against the unregulated crypto market.
The Democrat Senator has been one of the most vocal cryptocurrency skeptics. In the wake of her latest comments, the crypto market fell as much as six per cent on Thursday.
According to the senator, virtual currency and its exchanges have been operating without complying with any financial regulations. Rising manipulations and frauds in the crypto space may cost big to investors due to the lack of proper regulations, she noted.
Ms Warren has asked the regulators to protect vulnerable crypto investors who have been engaging in anonymous projects and schemes. She has demanded financial markets regulators to step up and use their full mandate to rectify these gaps.
How will Elizabeth Warren’s trial against crypto impact the market?
The US senator has dubbed the crypto market as the “wild West”. Responding to her critique, crypto purists said that hers is a “blind and narrow approach” that ignores advanced technology and the future of the financial market.
The overall crypto industry has a US$ 1.37 trillion market cap, with unregulated 10,804 tokens. Crypto exchanges witnessed frauds worth US$ 80 million during Q4 2020 and Q1 2021 due to unregulated operations. Warren has mentioned in her letter to the SEC that these frauds have impacted around 7,000 investors.
Source: Pixabay.com
Despite frauds and pump-and-dump schemes, crypto investors continue to trade in virtual currencies. US-based crypto exchange Coinbase posted a 10x surge on a year-over-year basis in the first quarter of 2021. Bitcoin recorded a lifetime high of around US$ 65,000 apiece in April.
The volatile nature of trading in the crypto space has, however, led to a massive fall of nearly 50 per cent in the last month.
Ms Warren anticipates that the central bank-led digital currency (CBDC) could be faster and securer than anonymous cryptocurrencies. Her worries appear to be more focused on the impact of crypto mining operations impact and their potential use for illegal activities.
The SEC interference in the crypto space could impact it positively and bring in more mainstream investors in the new age of technology-powered decentralized finance. Warren has asked the SEC chair to respond by July 28, 2021.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
