Massachusetts Senator Elizabeth Warren spoke out strongly against cryptocurrency at a Congressional hearing of the Economic Policy Subcommittee of the Senate Banking, Housing and Urban Affairs Committee on Wednesday.
Warren, known for her criticism of Wall Street and the creation of the Consumer Financial Protection Bureau, said the cryptocurrency has “serious problems” for four reasons: fluctuating value, investment problems, illegal activity, and environmental damage.
“Cryptocurrency has created opportunities to defraud investors, help criminals and exacerbate the climate crisis,” Warren said. “The threats published by cryptocurrency show that Congress and federal regulators cannot continue to hide in the hope that cryptocurrency will disappear. Will not be. It’s time to face these problems face to face. “
During the hearing, Warren interrogated Dr. Neha Narula, director of the Digital Currency Initiative at MIT, and Lev Menand, a lecturer at Columbia Law School.
One of the highlights of their conversation came when Warren asked Narula if the cryptocurrency system was stable and reliable, to which Narula replied, “No, unfortunately it is not. We’ve just seen the value of the entire cryptocurrency ecosystem fall by about 40% over the past two months. ” That 40% was the equivalent of $ 1 trillion, Warren said.
Warren gave an example of such an impact, saying, “This means that the grocery store can take $ 100 in bitcoin to pay for groceries, but by the end of the day, bitcoin may only be worth $ 60, in which case the store will lose.”
Warren also talked about the stability of Dogecoin.
“In just the last two months, the value of Dogecoin has increased more than tenfold, and then decreased by almost 60%,” says Warren. “Now it might work for speculators and fly-by-night investors, but not for ordinary people looking for a stable source of income to make money and use it for day-to-day expenses.”
At the hearing, Warren admitted that the banking system has traditionally excluded Americans, especially those of color, citing 33 million families who do not have or have no access to banking services.
Warren turned to Menand to ask if cryptocurrencies offered a safer alternative to traditional banking for consumers in the context of how the banking system had failed in the past.
“No senator, absolutely not, the crypto market is rife with consumer abuse. You know that consumer protection rules and measures are in place in the traditional financial space. Both are not used in cryptocurrency markets, so there are companies offering cryptocurrency storage services that have lost customers’ money, ”Manand replied. “There are many players who manipulate prices, which is why ordinary users are forced to pay high commissions. This is an unsafe place to keep money or invest funds. “
At the hearing, Warren also discussed cryptocurrency-related criminal activity.
“Online theft, drug dealing, ransom attacks and other illegal activities have become easier with cryptocurrency. According to experts, more than $ 412 million was paid to criminals last year in ransom using cryptocurrencies, ”Warren said.
Finally, the senator spoke about the environmental impact of the cryptocurrency, stating that one Bitcoin transaction – one purchase, one sale, or one transfer – uses the same amount of electricity as a typical U.S. household has been using for over a month.
Menand said the environmental costs of cryptocurrency do not outweigh the benefits, notably mentioning that “they undermine the government’s ability to sustain sustainable economic growth over time.”
The rationale behind Warren’s hearing was to say that the central bank’s digital currency is preferable to cryptocurrency, stating that it “holds great promise.” The idea behind CBDC is to serve as a public alternative to cryptocurrencies.
According to Menand, CBDC will be non-default sovereign money, cheaper to use and not subject to bankruptcy.
Warren agreed, saying, “Legitimate digital government money can help supplant counterfeit digital private money. This could help improve the financial inclusion, efficiency and security of our financial system – if this digital government money is well designed and used effectively, which are two very big ifs. “
Meanwhile, while Warren tries to thwart the development of cryptocurrency in the US, El Salvador recently adopted bitcoin as legal tender earlier this week.