Senator Elizabeth Warren has claimed that cryptocurrencies are controlled by “shadowy faceless groups of super-coders”.
She made this astonishing statement at a hearing organized by The Committee on Banking, Housing and Urban Affairs called “Cryptocurrencies: What Are They Good For?” It was here where she questioned crypto advocates and their belief that blockchain-based currencies can build a better financial system.
The progressive Democrat senator is known as a crypto skeptic and is a strong supporter of regulating the sector.
“The cryptocurrency boosters argue that crypto is the yellow brick road to a faster, cheaper, safer financial system that works for everyone, not just the biggest banks,” she said.
Continuing, Warren noted:
“There is no question that our financial system needs change – big structural change – and we should be willing to consider how these new technologies can help consumers and our economy. But as the cryptocurrency market grows, it is also our responsibility to carefully examine these claims and premises about crypto’s potential.”
Senator Warren in sharing at the hearing discussed the decentralized nature of crypto, describing the current financial system as “dominated by a handful of big banks that are mostly free to jack up costs to consumers, restrict access to financial products and gobble up smaller competitors until the big guys become too big to fail”.
“Bitcoin advocates claim cryptocurrencies and the blockchain technology that underlies them decentralize power and control, creating the possibility of a more democratic financial system,” said Warren.
“That sounds pretty good to me”
This latter moment of crypto-optimism proved to be very brief. Senator Warren asked Professor Angela Walch, Professor of Law at St. Mary’s University School of Law and Research Associate at the UCL Centre for Blockchain Technologies, whether blockchain-based currencies can truly decentralize power to create “a more democratic financial system”.
But the academic said miners and developers had the ability to manipulate the system.
“That sounds to me like a lousy trade-off,” Senator Warren exclaimed. “Instead of leaving our financial system at the whim of giant banks, crypto puts the system at the whim of some shadowy faceless group of super-coders and miners, which doesn’t sound better to me.”
She continued: “The giant banks have created huge problems, but I‘m not convinced crypto is the solution. In fact, it could be more dangerous for consumers, the environment, and the stability of our financial system.”
The Senator also wrote to Secretary Janet Yellen, Chair of the Financial Stability Oversight Council, setting out the “dangers” of crypto and calling for a “coordinated and cohesive regulatory strategy to mitigate the growing risks that cryptocurrencies pose to the financial system”.
The letter in claiming that bank and hedge fund exposure to crypto threatens the financial system, warns that cryptocurrencies are used in ransomware attacks, and even suggested stablecoins pose a “unique threat” because they could spark a wider financial collapse if there is a run where many holders try to sell their assets at once.
President Warren’s anti-crypto crusade was mocked and criticized on social media.
The comedian Tim Dillon tweeted:
“If Elizabeth Warren is saying this – the woman who torpedoed Bernie’s campaign for the establishment – rest assured crypto is making some big people unhappy.”
Lark Davis, a Bitcoin investor who uses the Twitter handle @TheCryptoLark, told his 434,000 followers that claiming crypto puts the financial system in the hands of shady super coders is “about as out of touch as saying the internet puts the postal system in hands of super shady coders”.
Altcoin Psycho, an account with more than 200,000 followers, also tweeted: “The year is 2062… The world is back on lockdown from the Lambda Delta Sigma Beta covid variant. Elizabeth Warren has uploaded her consciousness to a holographic NFT, and continues to make regulatory threats against crypto.”