Warren was speaking at the Senate Committee on Banking, Housing and Urban Affairs hearing on Tuesday, where she described stablecoins as “the lifeblood of the DeFi ecosystem,” where they are used to trade between different coins, and also to lend and borrow money outside of the regulated banking system.
Stablecoins are cryptocurrencies that are 1:1 to fiat currencies like the U.S. dollar for instance, which means unlike Bitcoin or any of the other cryptocurrencies that populate the market, their prices are meant to be steady.
Warren was sure to mention the risk she believes they pose to consumers and the economy as they’re “propping up one of the shadiest parts of the crypto world, DeFi, where consumers are least protected from getting scammed.”
Warren believes DeFi “is where the regulation is effectively absent and–no surprise–it’s where the scammers and the cheats and the swindlers mix among part-time investors and first-time crypto traders.”
She said “Our regulators need to get serious about clamping down before it is too late.”
Senator Sherrod Brown, Warren’s fellow party member, stated that stablecoins are “magic money”, mentioning that they’re neither decentralized nor transparent.
The Ohio Senator warned everyone by saying “If you put your money in stablecoins, there’s no guarantee you’re going to get it back.”
Senator Warren’s war on crypto has been going on for a while, now. She’s been very vocal about her criticism towards the larger crypto industry.
For instance, in July, Warren sent a letter to Treasury Secretary Janet Yellen, wherein she asked for a greater oversight of the crypto industry.
During that time, Warren stated “All the warning signs are flashing.” She continued “The hype, the volatility, the wild claims that turn out to be false. As the crypto market grows, so do the risks of our financial stability and our economy.”
Warren also set her sights on Greenidge Generation, a New York-based Bitcoin mining firm, earlier this month. She raised her concerns about its environmental impact.
In an interview prior to that, she told CNBC “one of the easiest and least disruptive things we can do to fight the climate crisis is to crack down on environmentally wasteful cryptocurrencies. “