U.S. Senator Elizabeth Warren (D-MA), a long-standing critic of cryptocurrency, instructed the New York Occasions that, in her view, cryptocurrency is “the brand new shadow financial institution.”
The Times story targeted largely on BlockFi, the venture-backed crypto lending startup that has drawn the attention of quite a few state regulators within the U.S. as a part of a broader “scrambling” to make amends for the evolving advance of crypto startups into banking-like companies.
Warren’s feedback — a “shadow financial institution” refers to a non-bank monetary entity that gives such companies exterior the remit of regular banking regulation — are a sign that the Massachusetts senator stays a robust critic of cryptocurrency and the trade constructed up round its functions.
“Crypto is the brand new shadow financial institution. It gives most of the similar companies, however with out the buyer protections or monetary stability that again up the standard system,” Warren instructed The Occasions. “It’s like spinning straw into gold.”
Per the report, Warren additionally raised the thought of “[banning] banks in the US from holding money deposits backing up stablecoins, which might successfully finish the surging market.”
Through a sequence of public letters, Warren has initiated a dialogue of kinds with the top of the Securities and Alternate Fee, Gary Gensler in addition to Janet Yellen, President Joe Biden’s Treasury Secretary.
In July, Warren wrote to Yellen and called for “a coordinated and cohesive regulatory technique to mitigate the rising dangers that cryptocurrencies pose to the monetary system.”