US Senator Elizabeth Warren (D-MA) is issuing a warning against a cryptocurrency subsector that she says poses a grave danger to the economy.
Senator Warren says in a U.S. Senate Banking, Housing, and Urban Affairs Committee hearing on stablecoins that decentralized finance (DeFi) poses the biggest risk to the economy as it is largely unregulated.
[adinserter block="1"]“DeFi is the most dangerous part of the crypto world.
This 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.
In DeFi someone can’t even tell if they’re dealing with a terrorist.”
According to the U.S. Senator, DeFi depends on stablecoins and therefore wouldn’t exist without the fiat-pegged cryptocurrencies.
“Stablecoins provide the lifeblood of the DeFi ecosystem.
In DeFi, people need stablecoins to trade between different coins, to trade derivatives, to lend and borrow money all outside the regulated banking system.
Without stablecoins DeFi comes to a halt.”
Senator Warren consequently says that regulators need to act as stablecoins are “propping up” DeFi.
“This is a risk to traders, a risk to our economy.
The time to act is before it all blows up. Stablecoins have no regulators, no independent auditors, no guarantors, nothing. And they are propping up one of the shadiest parts of the crypto world.
The place where consumers are least protected from getting scammed. Our regulators need to get serious about clamping down on these risks before it is too late.”
I
Follow us on X, Facebook and TelegramDon't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any assets including cryptocurrencies, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Tithi Luadthong/Natalia Siiatovskaia
