At a hearing of the Senate Banking Committee this morning, Senator Elizabeth Warren (D-MA), now one of Congress’s most prominent crypto skeptics, continued to sound the alarm about the potential dangers of blockchain technology.
The hearing, titled “Cryptocurrencies: What are they good for?”, featured testimony from three industry commentators: Jerry Brito, of the pro-crypto think tank Coin Center; Marta Belcher, an attorney and board chair of the Filecoin Foundation; and Angela Walch, a professor at St. Mary’s School of Law.
“All the warning signs are flashing,” said Warren of the crypto market. “The hype, the volatility, the wild claims that turn out to be false. As the crypto market grows, so do the risks to our financial stability and our economy.”
Part of Warren’s issue has to do with the idea that crypto isn’t really all that decentralized or disintermediated, as is often argued by the faithful; much of the wealth remains concentrated, and the largest companies and mining pools have ways of exerting control over the system.
“Instead of leaving our financial system at the whims of giant banks, crypto puts the system at the whims of some shadowy, faceless group of super-coders and miners, which doesn’t sound better to me,” she said.
Warren and other senators also went after some of the breathless rhetoric around crypto, dismissing oft-cited promises of greater financial inclusion as false advertising on the part of companies looking to protect their interests. Senator Sherrod Brown (D-OH) called it “phony populist” marketing.
“Regulators need to do their job and step in before it’s too late,” said Warren.
She addressed similar concerns last month, during a hearing on the development of a potential state-controlled digital currency, also known as a CBDC.
Yesterday, in a letter to Treasury Secretary Janet Yellen, Warren made an explicit plea for stricter regulations around cryptocurrencies, citing risks from stablecoins, DeFi protocols, and more.
“The longer that the United States waits to adapt the proper regulatory regime for these assets, the more likely they will become so intertwined in our financial system that there could be potentially serious consequences if this market comes under stress,” she wrote.
Editor's note: This story was updated to clarify that Marta Belcher is the board chair of the Filecoin Foundation.