Senate Banking Committee presses crypto experts on systemic risk at hearing

An engineer inspects a Sapphire Technology Ltd. AMD graphics processing unit (GPU) at the Evobits crypto farm in Cluj-Napoca, Romania, on Wednesday, Jan. 22, 2021.

Akos Stiller | Bloomberg | Getty Images

On Tuesday the Senate Banking Committee pressed a panel of crypto industry experts about systemic risks in a hearing titled “Cryptocurrencies: What are they good for?”

Some lawmakers made a point to speak in favor of the industry’s positive attributes. Sen. Cynthia Lummis, R-Wyo., said the transparency and openness of open source finance can promote financial inclusion. Sen. Sherrod Brown, D-Ohio, said blockchain technology could have many useful non-financial applications. The room seemed largely unconvinced, however that cryptocurrencies would make a good solution to the existing and very flawed financial system.

“Instead of leaving our system, our financial system at the whims of giant banks crypto puts the system at the whims of some shadowy, faceless group of super coders and miners, which doesn’t sound better to me,” Sen. Elizabeth Warren, D-Mass., said.

In a letter on Tuesday, Warren also called on Treasury Secretary Janet Yellen to draft a framework that federal agencies can use to regulate cryptocurrencies.

“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,” Warren wrote.

Two key themes

Systemic risk?

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