Senator Elizabeth Warren (D-Massachusetts) has written to Treasury Secretary Janet Yellen, urging her to lead the establishment of “a coordinated and unified regulatory plan to manage the mounting risks that cryptocurrencies represent to the financial system.”
The letter, dated July 26, urges Yellen to “act with urgency and exercise its legislative authority to address cryptocurrencies’ risks and guarantee the safety and stability of our financial system” in her “role as Chair of the Financial Stability Oversight Council.”
Warren then went on to say:
“In the lack of adequate regulation in the United States, I have become increasingly concerned about the risks that cryptocurrencies pose to investors, consumers, and the environment. However, as the demand for cryptocurrencies grows and these assets become more integrated into our financial system, the Council must consider whether these trends raise concerns that go beyond investor and consumer protection and into broader systemic vulnerabilities that could jeopardize financial stability.”
The FSOC was established in 2010 with the passing of the Dodd-Frank financial system regulating bill, which was enacted in the aftermath of the financial crisis of the late 2000s. Members of the group include the chairman of the Federal Reserve, the Comptroller of the Currency, and the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission, among others.
The letter contains some of Warren’s harshest statements on the subject of bitcoin yet. She blasted bitcoin networks’ energy use last month and called for tighter federal control.
“Congress and federal officials can no longer hide in the shadows, hoping that cryptocurrency would vanish. It is not going to happen. It’s past time to face these problems squarely in the face “During a hearing at the time, Warren said.
“FSOC should consider this situation and assess whether it is appropriate to use its statutory jurisdiction to restrict the systemic risks posed by the expanding cryptocurrency market,” Warren said in his Monday letter.
She came at this conclusion:
“The longer the US delays to develop the appropriate regulatory environment for these assets, the more probable they will get so entwined in our financial system that there could be potentially significant implications if this market becomes stressed.”