September 16, 2022

Warren Calls on Treasury to Use Every Tool to Rein In Crypto Market

Warren’s Oversight Investigations Over Last Two Years Have Revealed that Crypto Threatens National Security, Climate, Financial Stability, and Consumer and Investor Protections

Text of Letter (PDF)

Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Treasury Secretary Janet Yellen calling on the Treasury Department (Treasury) and the Financial Stability Oversight Council (FSOC) to build a strong regulatory framework for the crypto market. Senator Warren attached nine letters from two years of oversight investigations into the crypto market, providing evidence to Secretary Yellen of crypto’s threats to national security, the climate, financial stability, and consumer and investor protections. 

“I am deeply concerned by the volatility of the cryptocurrency market and the inadequate regulatory environment in which crypto scams, fraud, theft, and evasion continue to run rampant and mom-and-pop investors’ savings have evaporated. I urge you to take steps, both in your capacity as Treasury Secretary and as Chair of the Financial Stability Oversight Council, to protect the integrity of the American sanctions regime, reduce the effects of climate change and the burden on our energy infrastructure, ensure the safety and stability of our financial system, and protect consumers and investors,” wrote Senator Warren.

In the letter, Senator Warren highlighted a detailed set of concerns and findings from her oversight investigations into crypto: 

  • Crypto Poses National Security Risks: Criminals, rogue states, and other actors may use digital assets to hide transactions for nefarious purposes and to evade sanctions.
  • Cryptomining Exacerbates Environmental Risks: Bitcoin mining has increased nearly four-fold between 2019 and 2022 and its energy use rivals that of entire countries like Norway and Sweden. The intensive energy use from cryptomining also drives up energy prices for consumers. 
  • Crypto Poses Potential Threats to Financial Stability: Regulators and agencies have found that the growth of the crypto market may pose systemic risk to the financial system. The market also has massive levels of concentration and centralization, exacerbating risks and the concentration of wealth in the hands of a small group of people.
  • Crypto Market Fundamentally Lacks Protections for Consumers and Investors: Predatory tactics and advertising in the crypto industry target consumers, inducing them to invest in digital assets and crypto products they falsely market as safe and necessarily lucrative. Numerous crypto companies have made fraudulent claims about financial protections for consumers. Crypto companies lie to their customers, peddling junk assets and products – many of which have depleted mom-and-pop investors of their entire savings. 

Given these detailed findings, Senator Warren is calling on Secretary Yellen and Treasury to use every tool at their disposal, including FSOC’s statutory authorities, to mitigate risks in the crypto market.

Senator Warren is an outspoken advocate for reining in cryptocurrency to protect consumers and the environment: 

  • In September 2022, Senators Warren and Bob Menendez (D-N.J.), members of the Senate Banking Committee, Sherrod Brown (D-Ohio), Chair of the Senate Banking Committee, and Dianne Feinstein (D-Calif.), Bernie Sanders (I-Vt.), and Cory Booker (D-N.J.) sent a letter to Meta CEO Mark Zuckerberg, requesting information about the company’s efforts to combat cryptocurrency scams and hold bad actors accountable for cryptocurrency fraud on its platforms. 
  • In August 2022, Senators Warren, Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.), and Sanders sent a letter to the Office of the Comptroller of the Currency requesting that Acting Comptroller of the Currency, Michael Hsu, rescind the previously issued cryptocurrency guidance and replace it with more comprehensive guidance, in coordination with other prudential regulators. The lawmakers also asked for details regarding the extent to which banks are currently engaging in crypto-related activities. 
  • In July 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called out the role that large institutional investors, including venture capital, hedge funds, and private equity, play in funding, hyping, and sucking money from crypto projects that scam mom-and-pop investors. 
  • In July 2022,  Senators Warren, Whitehouse, Edward J. Markey (D-Mass.) and Jeff Merkley (D-Ore.) and Representatives Jared Huffman (D-Calif.) and Rashida Tlaib (D-Mich.) sent a letter to the Environmental Protection Agency and the Department of Energy, highlighting findings from their investigation into the environmental impacts of cryptomining and requesting that the EPA and DOE work together to require cryptominers to report their emissions and energy use. 
  • In May 2022, Senators Warren and Tina Smith (D-Minn.) sent a letter Fidelity, asking the company to explain its decision to allow Bitcoin investments for 401(k) plans, despite the Department of Labor’s warnings about 401(k) crypto investments.
  • In March 2022, Senator Warren, Senate Armed Services Committee Chair Jack Reed (D-R.I.), Senate Intelligence Committee Chair Mark Warner (D-Va.), and Senate Defense Appropriations Subcommittee Chair Jon Tester (D-Mt.) introduced the Digital Asset Sanctions Compliance Enhancement Act to ensure that Vladimir Putin and Russian elites don't use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the various cryptocurrency tools that could make it easier for sanctioned individuals to hide their wealth and lessen the impact of Russian sanctions.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned that cryptocurrency may allow Russia to dodge sanctions and urged stronger regulation of the crypto market to ensure that countries, drug traffickers, cyber criminals, and tax cheats can’t evade economic pain
  • In March 2022, Senators Warren, Warner, Reed, and Brown sent a letter to Treasury Secretary Janet Yellen, asking about the Treasury Department’s plans to enforce sanctions-compliance guidance for the cryptocurrency industry to ensure that economic sanctions remain an effective tool for achieving foreign policy goals.
  • In January 2022, Senators Warren, Whitehouse, Merkley, Markey, and Maggie Hassan (D-N.H.), and Representatives Tlaib, Huffman, and Katie Porter (D-Calif.) sent letters to six cryptomining companies raising concerns over their extraordinarily high energy usage. 
  • In December 2021, Senator Warren sent a letter to Greenidge Generation Holdings Inc., which operates a Bitcoin mining facility in upstate New York, expressing concern about the company’s energy usage and its impacts on the environment and consumers.
  • In December 2021, during a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren raised concerns over the growing risks presented by stablecoins. 
  • In September 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to step up to address crypto's regulatory gaps and ensure an inclusive financial system. 
  • In July 2021, Senator Warren sent a letter to the Securities and Exchange Commission Chair Gary Gensler requesting information about the agency's authority to regulate cryptocurrency exchanges and protect consumers from risks posed by the highly volatile cryptocurrency market.
  • In June 2021, chairing a hearing of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren delivered remarks on the opportunities and risks that digital currencies present. 
  • In a June 2021 interview, Senator Warren called the market for cryptocurrencies the “wild west,” and said digital currency is “not a good way to buy and sell things and not a good investment and an environmental disaster.”