Senator Elizabeth Warren, a longtime skeptic of bitcoin, has spoken out about the benefits of cryptocurrencies. While noting that “the biggest upside to cryptocurrency could be expansion or democratization of access to the financial system,” Senator Elizabeth Warren warned that the crypto industry may require federal bailout if something goes wrong, such as a “run on crypto.”
In an interview with Bloomberg last week, Senator Elizabeth Warren was asked about her thoughts on cryptocurrency regulation in the United States. “If people are going to be trading it out there, there needs to be a cop on the beat,” she began. “Because when there isn’t a cop on the beat in any market, it’s the small traders who get cheated, and that’s what always worries me,” the Massachusetts senator explained. “This is about putting some basic rules in place so that anyone can trade with just some basic confidence that the biggest kinds of scams will have a cop on the beat to blow the whistle and put a stop to it.”
In response to a specific question about the biggest upside and downside of cryptocurrencies, Warren stated: “The biggest upside to cryptocurrency could be the expansion or democratization of access to the financial system.”
“Right now, we have tens of millions of people in the United States who are either unbanked or underbanked, which means they have to go to check cashers and pay 3 percent of their paycheck just to get their cash,” she explained. “They have to pay money in order to make a utility payment or a rent payment, and that costs those people a lot of money.”
“It is possible that moving to a digital currency system, or expanding to a digital currency system, could bring in more people, and there are a lot of different ways that could be designed,” Senator Warren explained. As for the downside to cryptocurrency, Senator Warren stated: “The downside, of course, is that so long as it’s an unregulated system, you might be pulling more people in so that
She warned that the larger the cryptocurrency market grows and the longer it remains outside of the financial system, the more likely we will face another financial crash similar to the one that occurred in 2008. She warned, “If something goes wrong, there’s a run on crypto, there’s a problem elsewhere in the economy, I don’t want the US taxpayer to be called on to back this up.” Many people responded to Warren’s comment about a crypto run on Twitter. Some pointed out that she is still thinking like a banker, and that crypto is not like the stock market, where bankers seek government bailouts after a crash. Edge CEO Paul Puey expressed his thoughts as follows:
Cryptocurrency cannot be hacked. Crypto cannot be bailed out. You don’t have to. This is the ‘why’ of cryptocurrency.
Senator Warren has long been a skeptic of bitcoin. She slammed cryptocurrencies in May, citing environmental concerns and investor protection. She also agreed with Treasury Secretary Janet Yellen that the majority of cryptocurrencies are used for illicit financing.
Senator Warren has recently advocated for cryptocurrency regulation. She has urged Yellen to implement a policy to mitigate the risks of cryptocurrency as soon as possible. She also enquired with the chairman of the U.S. Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), has been directed to develop a crypto policy as soon as possible and to use the SEC’s “full authority” to regulate cryptocurrency trading.