The Massachusetts senator Elizabeth warren has always been an outspoken crypto Skeptic. In a recent interview with the New York Times, Warren called crypto the “new shadow bank”. Senator Warren had called for strong regulatory actions on the cryptocurrency industry in open letters to the SEC. However, in the Sunday interview with the times, she went a step further calling it a shadow bank.
“Crypto is the new shadow bank,” Warren said in the interview. “It provides many of the same services, but without the consumer protections or financial stability that back up the traditional system.”
Furthermore, The US Senator expressed her concerns over the growing popularity of stablecoins. A digital currency that has its value pegged to other assets such as fiat money or commodities.
She did also mention the possibility of banning US banks from holding reserves of private stablecoins. This approach as warren says “could effectively end the surging market.”
The Stablecoin Dilemma
A few months ago, U.S. Treasury Secretary Janet Yellen, demanded the financial authorities to expand upon the regulatory framework for stablecoins. the stablecoins market capitalization has had a massive jump from $37 billion to $123 billion in only one year. This huge jump in value has caused concerns since the stablecoins are mainly used to trade digital assets, especially cryptocurrencies. Fiat-pegged stablecoins are the ultimate apparatus to quickly trade assets such as bitcoin without the need for banking services.
In that regard, Banks are not happy for losing their customers as the cryptocurrency threat is on the rise. Many of the banking services are now free utilizing cryptocurrencies, not to mention the global accessibility for everyone regardless of nationality.
The US banks and lobbyist are now using their regulatory leverage in an effort the fight the cryptocurrency industry. Subsequently, politicians such as Elizabeth Warren and Janet Yellen are somehow trying to make the public minds ready for possible actions against crypto. The classic FUD method using threatening and condescending terminology to express something has been used before. calling crypto “the new shadow banks” or “expressing concerns” over a decentralized industry that provides banking services for the unbanked, is simply not fair.
Crypto Winter is Coming?
Not long after China imposing totalitarian crackdowns on crypto, it seems that there is a new wave of regulations coming towards the industry, but this time in the US.
So far, there has been a lot of talk yet very little action regarding crypto. However, there are signs that the US government will eventually make a big move. The growing cases of SEC lawsuits against online exchanges, cryptocurrencies or blockchain networks indicates a rise in seriousness and severity of the situation.
Although we cannot make predictions, at this point, in the US, a wave of regulations over crypto is imminent. We should wait and see how the market will react to them.
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