Diving summary:
- Sen. Elizabeth Warren, D-MA, on Wednesday praised Securities and Exchange Commission Chairman Gary Gensler's efforts to rein in the crypto market, but said the regulator still needs to do more to bolster its scrutiny of the industry in a effort to combat fraud.
- In a speech at a virtual event Hosted by the American Economic Liberties Project and Americans for Financial Reform, Warren said the SEC also needs more support from Congress and called on other regulators to step up enforcement in the digital asset sector.
- Warren, a vocal critic of the crypto industry, previously called for the SEC to exercise more authority over the sector. His comments follow a November opinion piece in The Wall Street Journalwhere he encouraged the agency to โdress upโ in its fight against crypto fraud.
Diving information:
"The commission has been strong and clear that cryptocurrencies do not go through longstanding security laws that protect investors and ensure the integrity of our financial markets," Warren said Wednesday. โThis is the right approach: The SEC has the right rules and the right experience, and Gary Gensler is showing that he is the right leader to get the job done.โ
Still, Warren added, the regulator needs to "use the full force of its regulatory powers on the entirety of the crypto market."
The comments echo Warren's opinion piece from November, in which he said the regulator has failed to exercise its authority over the growing cryptocurrency industry.
โ[P]Energy is worthless if the police officer on duty does not use it,โ he wrote. โThe SEC has launched some enforcement actions related to fraudulent and unregistered crypto offerings in recent years, but has lagged far behind as the crypto industry has attracted millions of new investors.โ
The responsibility for combating cryptocurrency-related fraud should not fall solely on the SEC, Warren said Wednesday, adding that Trump-era regulators allowed the sector to grow unchecked.
โGensler faced a critical task to put the genie back in the bottle and make the crypto ecosystem compliant after Trump regulators allowed it to explode,โ Warren said. โThe consequences of weak Trump regulators were not a surprise: in 2017, almost 80% of all initial coin offerings [were] scams. The following year, investors lost around $9 million every day due to crypto scams.โ
Warren called on bank regulators to step up oversight of the space, citing heavy crypto bank Silvergatewhich was forced this month to sell assets at a loss to cover roughly $8.1bn in withdrawals after the collapse of crypto exchange FTX triggered a bank run.
โOur bank regulators are also part of this fight,โ he said. โCrypto-friendly banks like Silvergate have already opened up the banking system to greater risk, raising the specter of a cryptocurrency crash in which US taxpayers get to keep the bag. ."
Warren also called on Congress to provide the SEC with the necessary resources to ensure it can regulate the crypto market.
"In pockets of this market where regulators may not have the authority they need, Congress should provide the tools to get the job done," he said. "We can see the risks to financial stability, but in the dark corners of the crypto world, the threat to our national security is growing."
