One way or the other, someone within the US Government or the Government itself is bent upon introducing crypto regulations. The policy-making is however the job of the Senators and if they want to reduce the crypto policy, they are authorized to do so.
It has been more than 8 months now that Government officials, particularly Senators, voiced in favor of crypto regulation. Amongst such Senators is Elizabeth Warren who seems to be at the helm of all affairs concerning cryptocurrencies or digital assets.
A Senate meeting was scheduled for Wednesday, the 15th of December, 2021. In this meeting, Senator Warren called upon the US authorities from the regulation side to clamp down the digital market of stablecoins. She also insisted that the regulators must immediately take notice of the exponentially growing decentralized finance (DeFi). She insisted that both these digital products are in dire need of regulation and any further delay would complicate things even more.
While addressing the Senators in the meeting, she brought before the Senators the matter concerning USDT and USDC i.e. the stablecoins. Noting her point, Open Markets Institute’s Director, Alexis Goldstein, commented that it is not necessary that stablecoins are always backed by 1 to 1. He argued that most of the time, back-end assets supporting stablecoins are not simply USD and could be digital assets as well. Goldstein impliedly suggested that for the time being stablecoins cannot be clamped down.
Warren further raised the point that as per Tether’s report, USDT is supported by USD to an extent of 10% only. While the rest of 90% of support comes from other sources, excluding USD. She argued that Tether’s report hasn’t been authorized by any tier-1 audit firm or by any US regulator per se.
She then talked about Decentralized Finance i.e. (DeFi). She argued that an unthinkable danger is lurking in the crypto economy which she claimed to be “DeFi”. She commented that with regard to DeFi sector, there is zero regulation. She then suggested that it is this very sector that is hiding malicious actors, scammers, and fraudsters in the disguise of investors. She argued that none in this sector can say with surety that they are dealing with genuine dealers and not a terrorist. Again, Warren raised the point that it is the stablecoin that is providing fuel to the DeFi sector. If there will be no stablecoins then there will be no sector of DeFi.
Furthermore, she asked a question from Prof. Hilary Allen whether the existence of stablecoins can expose US financial to risks. In response, Allen said that no doubt that stablecoin is essential for the existence of DeFi. Allen however rejected the fear that stablecoin pose any danger to the US’s financial system. But, she was not convinced and wanted some concrete steps that should have been taken by other Senators.
