Fun

US Senator Says Defi Is the Most Dangerous Part of Crypto – Urges Regulators to Clamp Down Before It’s Too Late

News Feed - 2021-12-16 10:12:36

US Senator Says Defi Is the Most Dangerous Part of Crypto – Urges Regulators to Clamp Down Before It"s Too Late


U.S. Senator Elizabeth Warren has called on regulators to clamp down on decentralized finance (defi) and stablecoins “before it’s too late.” She said: “Defi is the most dangerous part of the crypto world … it’s where the scammers, the cheats, and the swindlers mix among the part-time investors and first-time crypto traders.” US Senator Urges Regulators to Clamp Down on Defi and Stablecoins


During a hearing of the Senate Banking, Housing, and Urban Affairs Committee Wednesday, U.S. Senator Elizabeth Warren (D-Mass.) called on regulators to “clamp down” on stablecoins and decentralized finance (defi) platforms “before it is too late.”


She brought up stablecoins tether (USDT) and usd coin (USDC). In response to Senator Warren, Alexis Goldstein, director of financial policy at Open Markets Institute, explained that stablecoins “may not always be backed one-to-one … as the assets backing those tokens are often not real dollars.”


Warren pointed out that based on Tether’s own report, “only about 10% of the assets backing its stablecoin are real dollars in the bank. 90% is something else — not real dollars.” In addition, she stressed that the report “is not actually verified by a comprehensive audited financial statement or verified by any government regulator.”


While noting that “stablecoins are not always stable,” Warren described: “It’s worse than that. In troubled economic times people are most likely to cash out of risky financial products and move into real dollars. Stablecoins will take a nosedive precisely when people most need stability, and that run-on-the-bank mentality could ultimately crash our whole economy.” The senator detailed: Defi is the most dangerous part of the crypto world. This is where the regulation is effectively absent and — no surprise — it’s where the scammers, the cheats and the swindlers mix among the part-time investors and first-time cryptotraders. Shoot, in Defi someone can’t even tell if they are dealing with a terrorist.


She continued: “Stablecoins provide the lifeblood of the Defi ecosystem. In Defi, people need stablecoins to trade between different coins, to trade derivatives, to lend and borrow money – all outside the regulated banking system. Without stablecoins, Defi comes to a halt.”


During the hearing, Hilary Allen, professor at the American University College of Law, answered questions about whether stablecoins pose risk to the U.S. financial system. Warren asked the professor, “Does Defi threaten our financial stability? And can Defi continue to grow without stablecoins?”


Allen replied: “I don’t think Defi can grow without stablecoins. I think it would struggle. Right now, I think Defi is contained to the point where it won’t impact financial stability, but if it grows, I think there’s a real threat there. Particularly if it becomes intertwined with our traditional financial system, and there is industry interest in pursuing this integration on both the traditional finance and the crypto side. So, I think it’s critical that stablecoins not be allowed to fuel that growth.”


Emphasizing that “Stablecoins have no regulators, no independent auditors, no guarantors, nothing. And they are propping up one of the shadiest parts of the crypto world — the place where consumers are least protected from getting scammed,” Senator Warren concluded: This is risk to traders … to our economy. The time to act is before it all blows up … Our regulators need to get serious about clamping down on these risks before it is too late. Tags in this story Crypto regulation, decentralized finance, DeFi, defi regulations, Elizabeth Warren, elizabeth warren bitcoin, elizabeth warren crypto, Elizabeth warren decentralized finance, Elizabeth warren defi, Elizabeth warren stablecoins, stablecoin regulation


What do you think about Senator Elizabeth Warren’s comments? Let us know in the comments section below. Kevin Helms


A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. UK Bans Crypto Ads by Papa John"s Pizza, Coinbase, Etoro, Luno, Kraken REGULATION | 5 hours ago Tanzanian Central Bank Governor: Cryptocurrencies Not Outlawed, Traders Should Invest at Own Risk REGULATION | 22 hours ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleOtis Launches NFT Auction Platform That Transforms Real-World Items Into Digital Collectibles Next articleUK Bans Crypto Ads by Papa John’s Pizza, Coinbase, Etoro, Luno, Kraken Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItE-Commerce Giant Amazon Backs Wax Blockchain-Based Fractional Trading Card Market Dibbs: Report


According to reports, the e-commerce giant Amazon has recently invested in a fractional sports trading card marketplace called Dibbs. The platform, built on top of the Wax blockchain, allows users to purchase and sell fractions of collectible trading cards. Reports ... read more.Prosecutor General’s Office Wants to See ‘Cryptocurrency’ in Russian Law Crowdfunding Platform Kickstarter Will Shift to Blockchain-Based Model Indian Prime Minister Narendra Modi to Take Final Decision on Cryptocurrency Regulation Coinbase Launches Defi Yield Earning Service to Over 70 Countries, United States Not Included

News Feed

Coinmama Appoints Unicorn IronSource GM Sagi Bakshi as CEO
Coinmama Appoints Unicorn IronSource GM Sagi Bakshi as CEO Unicorn startup IronSource’s general manager, Sagi Bakshi, has joined cryptocurrency exchange Coinmama as CEO, sayin
Gareth Jenkinson13 hours agoUS crypto regulatory uncertainty could be Hong Kong’s gain — Yat SiuAnimoca Brands founder Yat Siu believes Hong Kong’s efforts to foster the Web3 ecosystem are in stark contrast to regu
Prashant Jha11 hours agoEU banking watchdog proposes liquidity rules for stablecoin issuersThe proposed guidelines are currently in the public consultation phase for the next three months and, if approved, will come into
Bitcoin, Ethereum Technical Analysis: BTC Drops Below $20K Ahead of Friday’s NFP Report
Bitcoin, Ethereum Technical Analysis: BTC Drops Below $20K Ahead of Friday’s NFP Report Bitcoin once again slipped below $20,000, as market uncertainty rose ahead of Fridayȁ
XRP Marks Another Milestone As Dubai Brings $16 Billion In Real Estate Company To The Blockchain – Details
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Number of Africa-Based Users on Kucoin Platform Surge by 200% in First 10 Months of 2021
Number of Africa-Based Users on Kucoin Platform Surge by 200% in First 10 Months of 2021 Despite largely lagging behind the rest of the world on many other metrics, Africa however
Solana Ventures Launches $100 Million Fund Focused on Web3 Projects in South Korea
Solana Ventures Launches $100 Million Fund Focused on Web3 Projects in South Korea Solana Ventures has revealed the launch of a $100 million fund dedicated to Web3 startups in Sout
8 Beginner Bitcoin Questions Answered
8 Beginner Bitcoin Questions Answered I asked some friends who were Bitcoin noobies what they wanted to know about Bitcoin, and was ready with some answers. Here
Biggest Movers: XRP Rises 7%, While LUNA Falls by the Same Amount
Biggest Movers: XRP Rises 7%, While LUNA Falls by the Same Amount Although cryptocurrency markets started the weekend lower, XRP was able to avoid the red wave, rising by as much a
Trump weighing Bitcoin hater Jamie Dimon for US Treasury
Tristan Greene7 hours agoTrump weighing Bitcoin hater Jamie Dimon for US TreasuryThe former president could reveal more details at the Bitcoin Conference in Nashville from July 25 through 27.3465 Total views20 Total shar
Stablecoins Are Crypto’s Version of Fractional Reserve Banking
Stablecoins Are Crypto"s Version of Fractional Reserve Banking Stablecoins provide much sought after stability in the volatile crypto markets. They are sometimes even said to aff
4 tips that’ll keep your crypto safe from hackers this bull market
Jesse Coghlan1 hour ago4 tips that’ll keep your crypto safe from hackers this bull marketFrom choosing a secure exchange to setting up DeFi protocols security, security sages have shared their top tips so you can keep