Senator Warren recently tore into cryptocurrencies, saying that they have failed to keep their promise and do more damage than good.
United States Senator Elizabeth Warren, in a senate hearing on June 9, offered some stern remarks on the cryptocurrency market. Speaking in a senate hearing on Central Bank Digital Currencies (CBDC), the Massachusetts senator said that cryptocurrencies “have turned out to be a fourth-rate alternative to real currency.”
Not one to mince words, Senator Warren also said that the promise of cryptocurrencies to overcome the wrongdoings of large banks has also failed. She refers to the volatility of the market, saying that it resulted in making crypto assets “a lousy way to buy things.” She singles out Dogecoin, one of the most high-profile assets to fluctuate heavily,
“In just the last two months, the value of Doge coin increased more than ten-fold…then declined by nearly 60%. That may work for speculators and fly-by-night investors, – but not for regular people looking for a stable source of value to get paid in and to use for day-to-day spending.”
Warren also says that cryptocurrencies are a “lousy investment” because they afford little investor protection, something which is now a hot topic among regulators. She also cites the funding of illegal activity as another major criticism of cryptocurrencies. The last point comes as the U.S. Colonial Pipeline infrastructure was hacked by the DarkSide group, which asked for a ransom in bitcoin.
She then goes on to say that CBDCs are legitimate and could overcome the shortcomings of the incumbent system. This is a stance that other governments are also taking, though they do leave room for cryptocurrencies themselves.
The statement does also point to a growing discussion on the creation of a CBDC, which the U.S. has been relatively quiet on until now. It’s clear that it will likely produce a digital version of the dollar, but talks seem to be in the early stages.
US going to crack down on crypto?
Recent events in the U.S. give the impression that authorities are lining up regulations — and it may not be very good for the market. Multiple officials in various governmental bodies have issued statements on crypto. This includes Treasury Secretary Janet Yellen, SEC Chairman Gary Gensler, and OCC Acting Comptroller Michael J. Hsu.
These officials have stopped short of outright lambasting cryptocurrencies, but there is an undertone of disapproval that might damage the market. Ideally, they would enforce regulations that would allow for innovation to continue. But there is no indication as to which side they will take when a law comes into place.
The Biden administration has proposed that there be international cooperation to ensure that traders do not avoid paying taxes. Furthermore, it’s likely that he will bring up the subject of cryptocurrencies with respect to cybersecurity attacks at the upcoming G7 summit.
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