Sen. Warren urges Treasury Secretary Yellen to combat rising crypto threats

Elizabeth Warren outlined her concerns about the cryptocurrency market in a letter addressed to Janet Yellen that was obtained by CNBC.

Senator Elizabeth Warren, a Democrat from Massachusetts, has called on United States Treasury Secretary Janet Yellen and other regulators to develop a “comprehensive and coordinated” framework for addressing risks in the cryptocurrency market. 

In a letter addressed to Yellen, the Democratic senator said the Financial Stability Oversight Council, also known as FSOC, “must act quickly to use its statutory authority to address cryptocurrencies’ risks and regulate the market to ensure the safety and stability of consumers and our financial system.” She continued:

“As the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system, consumers, the environment, and our financial system are under growing threats.”

In Warren’s view, an underregulated cryptocurrency market poses a significant risk to hedge funds and banks. She also cited concerns about the use of cryptocurrency in cyberattacks and the threat posed by stablecoins.

Related: Sen. Warren queries SEC chair on lack of crypto investor protection

Within the United States Senate, Warren has emerged as one of crypto’s biggest detractors. In June, she described digital assets like Dogecoin (DOGE) as a “fourth rate alternative to real currency” and urged the Senate Banking Committee to consider drafting more stringent regulations.

Calls to regulate cryptocurrencies have grown louder in recent months due to the apparent rise in crypto ransomware attacks and the alleged environmental impact of Bitcoin (BTC) mining. As Cointelegraph reported, the Securities and Exchange Commission has proposed working with Congress to table more comprehensive cryptocurrency regulation. Gary Gensler, the newly appointed chairman of the securities regulator, told a congressional subcommittee in March that his agency only spends $325 million annually on researching blockchain technology.

Related: Countries representing over 90% of global GDP are exploring CBDCs

Despite her criticisms of crypto assets in general, Warren appears to be much more open to the idea of a central bank digital currency, or CBDC. The Federal Reserve is in the process of researching CBDC development, but has not made any definitive plans to move ahead. As far as major central banks go, the Fed is considered well behind the adoption curve with respect to CBDCs.