Senator Elizabeth Warren, regarded as an outspoken cryptocurrency critic in the US government, questioned outages at exchanges and exorbitant transaction fees on the Ethereum network.
Warren claimed the crypto business had failed to provide answers for financial inclusion in the United States during a Senate Committee on Banking, Housing, and Urban Affairs meeting with Securities and Exchange Commission chair Gary Gensler on Tuesday.
She noted last week’s price reductions in cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), claiming that “$400 billion in market value vanished” and that many users had trouble accessing key exchanges such as Coinbase.
Warren suggested that investing in decentralized finance, or DeFi, initiatives was “quite dangerous” because many haven’t registered with the Securities and Exchange Commission and aren’t necessarily regulated by it.
She also mentioned some of the high transaction costs that occur during moments of strong volatility, such as on Sept. 7, when the BTC price went from $52,920 to an intraday low of $42,843.
“To switch between two crypto tokens on the Ethereum network, the charge was more than $500,” Warren added, referring to a hypothetical $100 token. “Small investors could quickly become trapped and wiped out in the face of these hefty, unpredictable fees.”
She continued, “
“Advocates say crypto markets are all about financial inclusion, but the people who are most economically vulnerable are the ones who are most likely to have to withdraw their money the fastest when the market drops […] high, unpredictable fees can make crypto trading really dangerous for people who aren’t rich.”
During the two-hour session, Gensler answered questions from US lawmakers about a policy framework for cryptocurrencies, requiring companies to disclose climate risks to investors, and other problems that could affect the SEC.
He encouraged crypto projects to engage with SEC officials about securities the platforms may be issuing in the form of digital assets in a prepared statement for his hearing posted yesterday.
Senator Warren has slammed cryptocurrencies for being linked to a slew of unlawful acts, including “unreliable technology,” scams, and the industry’s contribution to climate change. She advocated last month that U.S. banks be prohibited from maintaining reserves to back private stablecoins.
