Senator Warren Pressing Yellen to Clamp Down on DeFi and Stablecoins

U.S. Senator Elizabeth Warren (D-Ma) has once again shown her determination to rein in the Wild West of the cryptocurrency industry by personally penning a letter to Treasury Secretary Janet Yellen that asks for a “coordinated and cohesive” cryptocurrency regulatory strategy.

Warren claims that she has become “increasingly concerned” about the risks posed by digital assets amid their mushrooming growth.

The former Democratic presidential frontrunner laid out some key risks that the U.S. financial system could be exposed to unless the Financial Stability Oversight Council (FSOC) takes action.

Particularly, she mentioned hedge funds' excessive exposure to crypto, operational risks to banks, stablecoins, ransomware attacks and decentralized finance. Warren describes DeFi as an “opaque corner” of the market that could present “severe” risks to the country's financial stability given that the majority of projects have anonymous teams:

Given that participants and project developers may remain anonymous, DeFi could present particularly severe financial stability risks. According to a 2019 Financial Stability Board report, decentralized financial technologies may raise new forms of concentration risks, unclear allocation of liability, and recovery and resolution challenges.

The American lawmaker warns that there could be “serious consequences” if no regulatory regime gets established.

In early July, Warren sent a similar letter to Securities and Exchange Commission Chair Gary Gensler, urging the much-feared regulatory agency to close existing regulatory gaps in the crypto market and set a deadline for June 28.

As reported by U.Today, the senator riled up the cryptocurrency community in early June after slamming Bitcoin as a “lousy” investment and an environmental “disaster.” Twitter CEO Jack Dorsey unfollowed Warren after her anti-crypto tirade.