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Last week’s fall in cryptocurrency prices and subsequent failures in cryptocurrency exchange illustrate the need for the SEC to regulate cryptocurrency exchanges, says Sen. Elizabeth Warren.
Gary Gensler, chairman of the Securities and Exchange Commission, appeared before the Senate Banking Committee Tuesday morning to testify about the SEC’s work. Cryptocurrency was a major topic, which Gensler anticipated with an irritating “And now for cryptography” in his initial comments.
In a particularly focused exchange, Senator Warren criticized the claims of financial inclusion cryptography. “We hear a lot about how cryptography deals with financial inclusion,” he said. “I want to test with you if cryptography is an improvement over the financial system.”
Referring to last week’s accident, Warren said: “Within hours, the market value of $ 400 billion has just disappeared.” He raised a hypothetical retail investor who lost all his money after investing Monday night. Necessary to retire, that investor would find temporarily fallen cryptographic exchanges like Coinbase.
Warren and Gensler agreed that investor would have no recourse, as there is no federal regulatory regime for cryptographic exchanges. They specifically specified Coinbase, with Gensler complaining that they should not register as a stock exchange “even though they have dozens of tokens that could be securities.”
Then, referring to channels like “DeFi exchanges” (quoting Warren), he said that “the fee to switch between two tokens on the Ethereum network last Tuesday was more than $ 500.”
Gensler has focused the conversation on registering cryptocurrency exchanges with the Securities and Exchange Commission. Meanwhile, Coinbase has already reported a major conflict with the SEC over its Lend platform, which the SEC has threatened to sue as another sort of unregulated security.
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