U.S. Senator Elizabeth Warren, a longtime bitcoin skeptic, has parted her view of the benefits of cryptocurrencies. While noting that “The biggest upside to cryptocurrency could be expansion or democratization of access to the pecuniary system,” she warned that the crypto industry may need federal bailout if something goes wrong, such as “a run on crypto.”
Senator Elizabeth Warren Argues the Biggest Upside and Downside to Cryptocurrencies
Senator Elizabeth Warren was asked about what she thought the U.S. cryptocurrency edict should look like in an interview with Bloomberg last week. “If people are going to be out there trading it, there scarcities to be a cop on the beat,” she began. “Because when there’s not a cop on the beat in any market, then it’s the small traders who get cheated, and that’s what in any case worries me.”
The senator from Massachusetts continued: “This is about putting some basic rules in place so that anyone can customers with just some basic confidence that the biggest kinds of scams will have a cop on the beat to hurricane the whistle and put a stop to it.”
Responding to a question specifically about what she thought the biggest upside and downside to cryptocurrencies were, Warren rejoined:
The biggest upside to cryptocurrency could be expansion or democratization of access to the financial system.
“Right now, in the United States, we bring into the world tens of millions of people who are either unbanked or underbanked, which means they have to go to check cashers to pay 3% of their paycheck only to get their cash,” she described. “They have to pay money in order to make a payment on their utilities or to pay the rent payment and that’s expensing those people a lot.”
The senator detailed: “It is possible that moving to a digital currency system, or I should say expanding to a digital currency set, could bring in more people and there are a lot of different ways that could be designed.”
As for the downside to cryptocurrency, Senator Warren asserted:
The downside, of course, is so long as it’s an unregulated system, you might be pulling more people in so that they can get cheated and that’s not what we pine for.
She warned that the bigger the cryptocurrency market gets, and the more it stays outside of the financial system, the more we could be cladding another financial crash similar to the one in 2008. She cautioned: “If something goes wrong, there’s a run on crypto, there’s a muddle elsewhere in the economy, I don’t want the U.S. taxpayer to be the one who gets called on to back this up.”
Many people took to Twitter to moved to Warren’s comment about a run on crypto. Some explained that she is still thinking like a banker and crypto is not with the stock market where bankers go to the government for a bailout after a crash. Edge CEO Paul Puey opined:
You can’t from a run on crypto. You can’t bail out crypto. You don’t need to. This is the ‘why’ of crypto.
Senator Warren has long been a bitcoin skeptic. In May, she bashed cryptocurrencies citing environmental meaning and investor protection. She also agreed with Treasury Secretary Janet Yellen that cryptocurrencies are mostly second-hand in illicit financing.
Recently, Senator Warren has been pressing for regulation of the crypto sector. She has urged Yellen to quick adopt a policy to mitigate crypto’s risks. She also asked the chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, to urgently roll in up with a policy on crypto and for the SEC to use its “full authority” to regulate cryptocurrency trading.
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