US Senator urges tighter regulations after many crypto companies file for bankruptcy

US Senator Elizabeth Warren said that too many crypto firms have cheated customers while insiders profited. She emphasized the need for stronger rules and called on the Securities and Exchange Commission (SEC) and Congress to take action on cryptocurrency regulation.

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US senator says cryptocurrencies need tighter regulation

US Senator Elizabeth Warren expressed her concerns about investing in cryptocurrencies in an interview with Yahoo Finance Live after several crypto firms filed for bankruptcy protection. It called on the US Securities and Exchange Commission (SEC) to act, highlighting:

Congress must act, but the SEC is responsible for using its authority, building support, and cracking down on crypto companies that break the rules.

I have long been sounding the alarm about cryptocurrencies and the need for stricter rules to protect consumers and financial stability.

Last week, lending platform Celsius Network filed for bankruptcy protection after freezing withdrawals. A week earlier, another crypto lender, Voyager Digital, filed for bankruptcy protection. The company cited contagion in crypto markets and the failed crypto hedge fund Three Arrows Capital as reasons.

Warren emphasized:

Too many crypto firms have deceived customers and left ordinary investors in the lurch while insiders profited.

In May, SEC Commissioner Hester Peirce expressed concern that the securities watchdog was abandoning regulation of cryptocurrencies. "We can go after fraud and we can play a more positive role on the innovation side, but we have to get there, we have to start working... I haven't seen us willing to do that kind of work yet."

SEC Chairman Gary Gensler has been criticized for his approach to cryptocurrency regulation. So in May, the securities regulator said it would nearly double the size of its law enforcement division's crypto unit. A few days ago, Gensler already outlined what investors can expect from the SEC on the cryptocurrency regulatory front.

Senator Warren has on several occasions urged Gensler to strengthen oversight of cryptocurrencies. In July last year, it warned of the growing risks of cryptocurrency trading and called on the securities regulator to "use its full power to address these risks". She also said decentralized finance (defi) is the most dangerous part of cryptocurrencies and urged regulators to ban stablecoins and defi platforms before it's too late.

In May, financial firm Fidelity Investments criticized the company's decision to allow bitcoin investments in pension plans. The senator also repeatedly emphasized the impact of Bitcoin on the environment.

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All content in this article is for informational purposes only and does not in any way serve as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.