Senators Slam Stablecoins in Latest Push For Tighter Regulations

Original author: Martin Young

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Massachusetts Senator Elizabeth Warren is leading the charge against crypto once again. In a video posted on Dec. 15, she said that stablecoins pose risks to consumers and the economy because they are “propping up one of the shadiest parts of the crypto world, DeFi, where consumers are least protected from getting scammed.”

It is not the first time she has branded the crypto industry “shady” or similar. In July, the angry Senator said that “shadowy super coders” were behind crypto, making it a threat to the U.S. financial system.

This most recent tirade was unleashed at a Senate Committee on Banking, Housing, and Urban Affairs hearing on Dec. 14.

Stablecoins pose risks to consumers & to our economy. They’re propping up one of the shadiest parts of the crypto world, DeFi, where consumers are least protected from getting scammed. Our regulators need to get serious about clamping down before it is too late. pic.twitter.com/hMOT1HIQgn

— Elizabeth Warren (@SenWarren) December 14, 2021

Senators on the Stablecoin Warpath

Stablecoins do threaten the traditional financial system as they were designed to. The Federal Reserve controls the dollar, and it has plunged the economy into crisis with unprecedented money printing resulting in a 40-year-high inflation rate.

This must be what the Senator was referring to regarding consumer protection.

At the same hearing, Senator Sherrod Brown joined his compatriot and labeled crypto as “magic money.” Senator Brown opened the hearing with a tirade against stablecoins and their relationship with this “new fantasy economy.” He added that they facilitate users risking money on volatile and sometimes fraudulent cryptocurrencies.

Just a week ago, a number of crypto CEOs and executives traveled to Capitol Hill to explain the role of stablecoins and what the industry was all about in an effort to quell concerns and these sweeping statements. Those efforts appear to have fallen on deaf ears judging by the vehemence coming from these anti-crypto policymakers.

The hearing occurred the same day that Tether was hit with another lawsuit which CTO Paolo Ardoino labeled “nonsense and copycat.”

In the Crypto Corner

Six Senators have been fighting in support of the industry, however. In a letter sent to Treasury secretary Janet Yellen on Dec. 14, Senators Rob Portman, Mark Warner, Mike Crapo, Kyrsten Sinema, Pat Toomey, and Cynthia Lummis urged for crypto-specific regulations.

Their particular umbrage was the use of the term “broker” in the recently passed infrastructure bill that would see software suppliers, mining operations, and wallet providers liable for tax reporting.

“We urge the Department of the Treasury to provide information or informal guidance as soon as possible – no later than the end of the current calendar year – regarding the definition of “broker” as discussed during the legislative process.”