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At the U.S. Senate Banking Committee hearing on Tuesday, Senator Elizabeth Warren called on Securities and Exchange Commission (SEC) Chairman Gary Gensler to step up cryptocurrency oversight. She spoke of several issues she associates with cryptocurrency that could hurt small investors.
Senator Elizabeth Warren Says “There Is A List Of Problems With Crypto”
U.S. Senator Elizabeth Warren asked U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler about several cryptocurrency issues during the Senate Banking Committee hearing on Tuesday.
The Massachusetts senator began by noting that last Tuesday, “In a matter of hours, $ 400 billion in market value was gone.” She went on to point out that as cryptocurrency prices fell, “several of the largest crypto exchanges were going out of order, preventing customers from making withdrawals or transactions.”
Wondering how this affects small retail investors, “who don’t have a lot of money to spare,” Warren described a hypothetical situation. “Let’s say that last Monday I took out the last slice of my savings. I went on the Coinbase crypto exchange. I bought ether for $ 100. Then I woke up early Tuesday morning, saw that the market looked like it was starting to collapse, and I thought I’d better sell now, ”she said, adding:
But when I tried to sell, Coinbase, the exchange, was going down. So, President Gensler, was there anything I could do to withdraw my money?
Gensler replied, “Not in a federal agency because they [Coinbase] have not yet registered with us, even though they have dozens of tokens which may be securities.
Senator Warren then described another hypothetical situation. “Instead of buying Ether on Coinbase last Monday, I decided to spend that $ 100 on buying a cool new token – let’s call it ‘new coin’ – that was in the process of being publicized on Twitter, “she detailed. “The new coin is only available on a ‘decentralized’ crypto exchange, so to buy it I had to pay a fee, around $ 20, to the crypto miners who processed the transactions… Then, of course. , I woke up Tuesday morning and the market was tanking. ”
She asked Gensler how much she would have to pay the exchange to sell her coins and quickly come back to dollars, stating:
How much would I have to pay to get out of the challenge on Tuesday to sell my coins. Should I have paid an additional fee of $ 20 or should I have paid even more?
The SEC chairman quickly replied, “I don’t know because everything will be in the user agreement.” He added that many platforms “are decentralized only by name,” citing that “there is a user agreement. There is something you do with this platform. There is a token. governance There is usually a fee.
While the chairman of the SEC has said he does not know what fees a particular exchange charges, Senator Warren referred to network fees.
“We know some of the charges from last Tuesday. The fee to trade between two crypto tokens on the Ethereum network was over $ 500, far more than the $ 100 I was trying to trade in the first place, ”she exclaimed, noting:
My question is, with these high and predictable fees, small investors could easily get stuck and completely wiped out.
Senator Warren then asserted that cryptocurrency is not a path to financial inclusion. “President Gensler, advocates say the crypto markets are all about financial inclusion. But the most economically vulnerable are those most likely to have to withdraw their money the fastest when the market goes down. Does this sound like a path to financial inclusion? “
Gensler replied, “This is a highly speculative asset class. It doesn’t sound like the path you mentioned.
Warren continued:
There is a whole list of problems with crypto: unreliable technology, scams, devastating climate impact. But high and unpredictable fees can make crypto trading really dangerous for people who are not rich.
She concluded: “Regulators must step up efforts to close crypto regulatory gaps,” stressing: “Chairman Gensler, I expect you and the SEC to play a leading role in making this happen.”
What do you think of what Senator Elizabeth Warren told SEC Chairman Gensler? Let us know in the comments section below.
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