Warren Urges FSOC To Use Authority to Address Cryptocurrency Market, Protect Consumers, and Mitigate Financial Stability Risks
Washington, D.C. — U.S. Senator Elizabeth Warren (D-Mass.), chair of the Senate Banking, Housing, and Urban Affairs (BHUA) Subcommittee on Economic Policy, sent a letter to U.S. Treasury Secretary Janet Yellen urging the Financial Stability Oversight Council (FSOC) to use its existing authority to address risks posed by the highly volatile cryptocurrency market and lead the financial regulatory agencies in developing a comprehensive and coordinated approach to regulating cryptocurrencies.
The letter comes as Senator Warren questions experts on the significant risks that the cryptocurrency market poses for investors and the stability of our financial system during a BHUA Committee hearing.
“As the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system, consumers, the environment, and our financial system are under growing threats,” said Senator Warren. “FSOC must act quickly to use its statutory authority to address cryptocurrencies’ risks and regulate the market to ensure the safety and stability of consumers and our financial system.”
As of June 2021, there are estimated to be more than 2,000 cryptocurrencies in global circulation, with a market value that could exceed $2 trillion. Senator Warren has expressed increasing concern that the financial system has become exceedingly intertwined with these digital assets such that disruption in the cryptocurrency market could spread throughout the financial sector. Specifically, Senator Warren cites risks including:
- Exposure to Hedge Funds and Other Investment Vehicles that Lack Transparency;
- Risk to Banks;
- Unique Threats Posed by Stablecoins;
- Use in Cyberattacks that Can Disrupt the Financial System;
- And Risks from “Decentralized Finance” (DeFi).
Senator Warren has actively called on regulators and led oversight to protect consumers from market-related risks.
- In June 2021, Senator Warren delivered remarks and chaired a hearing with experts on the opportunities and risks that digital currencies present.
- In June 2021, Senator Warren also sent a letter to Securities and Exchange Commission (SEC) 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.
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