- Sen Elizabeth Warren is calling on the Securities and Exchange Commission (SEC) to assess cryptocurrency exchanges in relation to the U.S. financial markets and any risks they potentially pose to consumers.
- The initiative comes weeks after the Senator bashed Bitcoin for its energy consumption but with adoption ever-growing, the government has had to adjust its approach.
Sen Elizabeth Warren has taken a keen interest in the cryptocurrency market. On Thursday, Warren wrote a letter to the Securities and Exchange Commission (SEC). In it, she expressed great concern over ‘regulatory gaps’ in the cryptocurrency market that extend to the crypto exchanges where most investors buy, sell and store their digital assets.
The Democratic senator noted that the lack of clear regulations on the exchanges posed a threat not only to the larger financial markets but also to the consumers who entrusted their investments to these exchanges. “The SEC must use its full authority to address these risks, and Congress must also step up to close these regulatory gaps and ensure that every investor has access to a safe cryptocurrency marketplace,” she added.
Beginning late last year, the cryptocurrency market has witnessed huge demand. During this time, regulators have identified gaps that are partly caused by a lack of a proper classification of cryptocurrencies. With some cryptocurrencies on the borderline of being securities, this leaves exchanges exposed. While most of the activities of the exchange fall under the SEC overview, there’s a need for interagency cooperation involving the Commodity Futures Trading Commission, the Treasury Department and bank regulators.
Senator Elizabeth Warren who expects the SEC to take initiative before the end of the month wrote;
These regulatory gaps also extend to the way that cryptocurrency exchanges hold an individual’s crypto-assets, which would not be allowed on a traditional securities exchange,
She further added that the lack of ” common-sense regulations” has left consumers at the mercy of manipulators and fraudsters.
Since taking office SEC Chair Gary Gensler has expressed interest in regulating the space. He has called on Congress to give the SEC greater authority to regulate the crypto market. Prior comments on the market suggest that he is open to new innovation and is unlikely to introduce regulations that limit growth in the space.
Activities from the two largest cryptocurrency exchanges- Coinbase and Binance has suggested a keen interest in embracing regulation. Brian Armstrong, the CEO of Coinbase, has in recent months travelled to Washington and met with government officials to discuss initiatives that the government and other players can take to grow and protect the space. His exchange, which is now publicly traded is at the forefront of making the space a safe and risk-free space. However, Binance despite not being under investigation in the US has come under regulatory fire in at least 6 countries including Singapore, Thailand and the UK. Although the CEO has reiterated that the exchange is willing to cooperate with authorities, the investigations have dented the firm’s reputation.