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“High, unpredictable fees can make crypto trading really dangerous for people who aren’t rich,” said Senator Warren.
Democratic Senator Elizabeth Warren, widely regarded as an ardent crypto sceptic in the United States government, has criticised exchange outages and hefty transaction fees during periods of price volatility.
Warren claimed the crypto business had fallen short of delivering solutions for financial inclusion in the United States during a Senate Committee on Banking, Housing, and Urban Affairs meeting with Securities and Exchange Commission chair Gary Gensler on Tuesday. She noted last week’s price declines in cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), claiming that “$400 billion in market value vanished,” while many users reported difficulties accessing key exchanges such as Coinbase.
Warren suggested that investment in decentralised finance, or DeFi, ventures was “pretty risky,” given that many have not registered with the SEC and are not necessarily subject to its regulatory oversight. Furthermore, she emphasised some of the high transaction costs during moments of volatility — in this case, on Sept. 7, when the BTC price went from $52,920 to an intraday low of $42,843.
“The fee to swap between two crypto tokens on the Ethereum network was more than $500,” said Warren, referring to trading a hypothetical token worth $100. “In the face of these high, unpredictable fees, small investors could easily get jammed and wiped out entirely.”
“Advocates say crypto markets are all about financial inclusion, but the people who are most economically vulnerable are the ones who are most likely to have to withdraw their money the fastest when the market drops […] high, unpredictable fees can make crypto trading really dangerous for people who aren’t rich.”
During the two-hour meeting, Gensler answered multiple questions from US senators about a crypto policy framework, mandating corporations to disclose climate risks to investors, and other problems possibly influencing the SEC. He encouraged crypto projects to talk with SEC regulators about securities the platforms may offer in the form of digital assets in a prepared statement for his hearing posted yesterday.
Senator Warren has frequently condemned cryptocurrency as being associated with a variety of unlawful actions, including “untrustworthy technology,” scams, and the industry’s influence on climate change. She advocated last month that US banks be barred from maintaining reserves to back private stablecoins.