{"id":367,"date":"2021-12-16T01:29:51","date_gmt":"2021-12-16T01:29:51","guid":{"rendered":"https:\/\/cryptoheretostay.com\/?p=367"},"modified":"2021-12-16T01:29:52","modified_gmt":"2021-12-16T01:29:52","slug":"us-senator-says-defi-is-the-most-dangerous-part-of-crypto-urges-regulators-to-clamp-down-before-its-too-late","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=367","title":{"rendered":"US Senator Says Defi Is the Most Dangerous Part of Crypto \u2013 Urges Regulators to Clamp Down Before It&#8217;s Too Late"},"content":{"rendered":"<p> <script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<\/p>\n<p><strong>U.S. Senator Elizabeth Warren has called on regulators to clamp down on decentralized finance (defi) and stablecoins \u201cbefore it\u2019s too late.\u201d She said: \u201cDefi is the most dangerous part of the crypto world \u2026 it\u2019s where the scammers, the cheats, and the swindlers mix among the part-time investors and first-time crypto traders.\u201d<\/strong><\/p>\n<h2>US Senator Urges Regulators to Clamp Down on Defi and Stablecoins<\/h2>\n<p>During a hearing of the Senate Banking, Housing, and Urban Affairs Committee Wednesday, U.S. Senator Elizabeth Warren (D-Mass.) called on regulators to \u201cclamp down\u201d on stablecoins and decentralized finance (defi) platforms \u201cbefore it is too late.\u201d<\/p>\n<p>She brought up stablecoins tether (USDT) and usd coin (USDC). In response to Senator Warren, Alexis Goldstein, director of financial policy at Open Markets Institute, explained that stablecoins \u201cmay not always be backed one-to-one \u2026 as the assets backing those tokens are often not real dollars.\u201d<\/p>\n<p>Warren pointed out that based on Tether\u2019s own report, \u201conly about 10% of the assets backing its stablecoin are real dollars in the bank. 90% is something else \u2014 not real dollars.\u201d In addition, she stressed that the report \u201cis not actually verified by a comprehensive audited financial statement or verified by any government regulator.\u201d<\/p>\n<p>While noting that \u201cstablecoins are not always stable,\u201d Warren described: \u201cIt\u2019s worse than that. In troubled economic times people are most likely to cash out of risky financial products and move into real dollars. Stablecoins will take a nosedive precisely when people most need stability, and that run-on-the-bank mentality could ultimately crash our whole economy.\u201d The senator detailed:<\/p>\n<p>Defi is the most dangerous part of the crypto world. This is where the regulation is effectively absent and \u2014 no surprise \u2014 it\u2019s where the scammers, the cheats and the swindlers mix among the part-time investors and first-time cryptotraders. Shoot, in Defi someone can\u2019t even tell if they are dealing with a terrorist.<\/p>\n<p>She continued: \u201cStablecoins 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 \u2013 all outside the regulated banking system. Without stablecoins, Defi comes to a halt.\u201d<\/p>\n<p>During the hearing, Hilary Allen, professor at the American University College of Law, answered questions about whether stablecoins pose risk to the U.S. financial system. Warren asked the professor, \u201cDoes Defi threaten our financial stability? And can Defi continue to grow without stablecoins?\u201d<\/p>\n<p>Allen replied: \u201cI don\u2019t think Defi can grow without stablecoins. I think it would struggle. Right now, I think Defi is contained to the point where it won\u2019t impact financial stability, but if it grows, I think there\u2019s a real threat there. Particularly if it becomes intertwined with our traditional financial system, and there is industry interest in pursuing this integration on both the traditional finance and the crypto side. So, I think it\u2019s critical that stablecoins not be allowed to fuel that growth.\u201d<\/p>\n<p>Emphasizing that \u201cStablecoins have no regulators, no independent auditors, no guarantors, nothing. And they are propping up one of the shadiest parts of the crypto world \u2014 the place where consumers are least protected from getting scammed,\u201d Senator Warren concluded:<\/p>\n<p>This is risk to traders \u2026 to our economy. The time to act is before it all blows up \u2026 Our regulators need to get serious about clamping down on these risks before it is too late.<\/p>\n<p>Tags in this story<\/p>\n<p>Crypto regulation, decentralized finance, DeFi, defi regulations, Elizabeth Warren, elizabeth warren bitcoin, elizabeth warren crypto, Elizabeth warren decentralized finance, Elizabeth warren defi, Elizabeth warren stablecoins, stablecoin regulation<\/p>\n<p><em><strong>What do you think about Senator Elizabeth Warren\u2019s comments? Let us know in the comments section below.<\/strong><\/em><\/p>\n<p>Kevin Helms <\/p>\n<p class=\"article__body__author__info__about\">\nA student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.<\/p>\n<p><i class=\"td-icon-font td-icon-mail-1\"\/><\/p>\n<p class=\"images_credits\"><em>Image Credits: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n<p><strong>Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<p>More Popular NewsIn Case You Missed It<\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/news.bitcoin.com\/us-senator-defi-most-dangerous-part-of-crypto-regulators-clamp-down-before-its-too-late\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>U.S. Senator Elizabeth Warren has called on regulators to clamp down on decentralized finance (defi) and stablecoins \u201cbefore it\u2019s too late.\u201d She said: \u201cDefi is the most dangerous part of the crypto world \u2026 it\u2019s where the scammers, the cheats, and the swindlers mix among the part-time investors and first-time crypto traders.\u201d US Senator Urges [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":368,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[1],"tags":[],"class_list":["post-367","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-updates"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=367"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/367\/revisions"}],"predecessor-version":[{"id":369,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/367\/revisions\/369"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/368"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}