HomeCryptoSen. Elizabeth Warren calls crypto the ‘new shadow bank‘

Sen. Elizabeth Warren calls crypto the ‘new shadow bank‘

United States Senator Elizabeth Warren, one of the most vocal cryptocurrency skeptics in the U.S. government, has called the cryptocurrency industry the “new shadow bank.”

In a Sept. 5 interview with the New York Times, Warren said that the cryptocurrency industry offers “many of the same services” as shadow banks, but still lacks “consumer protections or financial stability that back up the traditional system.” 

Warren expressed concerns over the rapidly growing market for stablecoins, a type of cryptocurrency whose value can be pegged to that of other assets, including fiat currencies like the U.S. dollar, the euro, or commodities like gold.

The senator said that it’s “worth considering” banning U.S. banks from holding the reserves to again non-public stablecoins, a transfer which “could effectively end the surging market.”

The complete market capitalization of stablecoins like Tether (USDT) and USDC Coin (USDC) has surged parabolically this 12 months, leaping from round $37 billion in January to $123 billion at the time of writing, in response to information from Statista and CoinMarketCap. Large stablecoin accumulations have been broadly perceived as an indicator of shopping for energy for cryptocurrencies like Bitcoin (BTC) as fiat-pegged stablecoins allow a software for merchants to simply deposit on exchanges to purchase and promote crypto.

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Warren’s newest remarks come as world monetary regulators pay extra consideration to stablecoins like USDT. According to on-line experiences, the Ontario Securities Commission has not too long ago banned USDT buying and selling providers by Canada’s first two registered crypto exchanges, Wealthsimple and Coinberry. In mid-July, U.S. Treasury Secretary Janet Yellen referred to as on monetary authorities to determine a correct regulatory framework for stablecoins.