In the wake of the launch of a Bitcoin-focused 401(k) account- a retirement plan- in the United States by Fidelity Investments, two Senators – Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, have expressed concerns over the company’s latest products and this was contained in a letter to the firm’s Chief Executive Officer, Abigail Johnson.
As contained in the Senator’s letter, a demand was placed on Abigail to explain some of the inherent risks that are associated with the launch of the Bitcoin-backed product to American workers. The senators demanded that Fidelity clarify the risks involved in the 401(k) investments and how the company will address these risks.
Additionally, the Senators demanded to know how the firm will address the susceptibility of Bitcoin to manipulation as well as “the additional Bitcoin risks identified by DOL, including the challenge for plan participants to make (an) informed investment.”
Fidelity’s push to extend the investment into 401(k) was said to be based on growing demand from employees. Despite the firm clarifying that it will charge no fees for the service, the Senators still demanded to know if the proposed customers would need to worry about any fees at all.
In the prior announcement, Fidelity said it would only permit about 20% of a particular client’s portfolio to be invested in digital currencies, however, the claim of popular demand has mainly been faulted by the Senators who wrote;
“Despite a lack of demand for this option — only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu – Fidelity has decided to move full speed ahead with supporting Bitcoin investments.”
It is not uncommon to find some Senators expressing dissatisfaction about anything relating to Bitcoin, drawing on the fact that it is a Proof-of-Work (PoW) coin with a high Carbon footprint. With Fidelity’s investment offering now being questioned, time will show whether true organic demands fueled the launch of the product or not.
A DeFi user has filed a lawsuit against Pool Together Inc. after depositing $10 in a pool of funds governed by a smart contract.
PoolTogether is a “no loss” lottery that lets users stake their tokens into savings pools for a chance to win a weekly prize.
The outcome of this case could set a precedent toward establishing a regulatory framework in the DeFi space.
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The plaintiff argues that PoolTogether occupies a regulatory “grey zone.”
PoolTogether Faces Lawsuit
A new DeFi user with connections to Senator Elizabeth Warren is suing one of Ethereum’s earliest yield farming protocols.
PoolTogether Inc.,a Delaware corporation linked to the blockchain based app PoolTogether, is facing a class-action lawsuit filed in New York federal court. The lawsuit was filed by a software engineer named Joseph Kent, a former technology lead for Warren’s 2020 presidential campaign. PoolTogetheris a DeFi protocol that sells itself as a “crypto-powered savings protocol based on Premium Bonds.” It’s a smart contract on Ethereum that gives users the opportunity to win token prizes from the interest generated by the assets it pools. The protocol earns yield from farming the deposited tokens on other DeFi protocols. One of DeFi’s most widely used lending protocols, Compound Labs Inc., is also named in Mr. Kent’s suit.
The lawsuit comes after Mr. Kent deposited $10 worth of cryptocurrency in PoolTogether in October 2021. Kent has claimed that PoolTogether isn’t legally permitted to run prize-linked savings accounts His suit has been filed under a New York state law that lets a person who purchases an illegal lottery ticket bring a class-action lawsuit on behalf of themselves and other ticket-holders.
Under the law, defendants in these lawsuits are liable for as much as twice the amount that the entire class paid for their tickets. PoolTogether users have made deposits of at least $122 million, according to Mr. Kent’s lawsuit.
In the traditional finance system, users are trusted to follow the law, and face punishment if they break the rules. DeFi operates differently as the rules are encoded in smart contracts that anyone can see.
A Regulatory “Grey Zone”
However, while crypto proponents profess that “code is law,” the DeFi space is largely unregulated. That’s part of what’s made the space a fertile ground for criminal activity through hacks, rug pulls, and smart contract exploits. Regulators have paid closer attention to the space as it’s grown over the past year; stablecoins, a key component of DeFi, have been the subject of intense scrutiny, not least in the U.S. (the SEC Chair Gary Gensler, Treasury Secretary Janet Yellen, and the Federal Reserve Chair Jerome Powell have all issued warnings about the technology in recent months, while Warren has taken shots at DeFi and the environmental impact of Bitcoin mining on multiple occasions).
Kent’s lawsuit points to the alleged regulatory “grey zone” that PoolTogether occupies. Whether PoolTogether Inc. will come under fire depends on if the PoolTogether smart contract is classified as a managed investment scheme. Additionally, the case will also consider whether PoolTogether Inc. needed any territory-based permits to deploy a smart contract on the blockchain. As PoolTogether claims to be a “no loss” savings protocol, there is also an argument that the product can not be considered a lottery.
Defending PoolTogether Inc. is Kevin Broughel, who has argued that the company doesn’t own or control the protocol; instead, he says its operations are governed by its original coding, which can only be changed by a majority vote of holders of its governance token, POOL. Broughel has also said that deposits don’t qualify as lottery entries.
While the case is still in its early stages, it could set an important precedent for the DeFi and cryptocurrency industry. The focus will be on who gets to decide what the rules of code are, and how much control smart contract coders have over their projects. In other words, it will try to determine whether DeFi is truly decentralized.
Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.
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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
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The argument on who really benefits from bitcoin is a long one in the making. For those who have been invested in the digital asset for a couple of years, they have obviously been making the most profit given the recent rallies in the market. However, there is still a lot of BTC that remains in the possession of what is a small number of bitcoin users and that has led to some concerns regarding the distribution of the digital asset.
Majority Of BTC Held In 0.01% Of Wallets
It was reported a little over a week ago by the Wall Street Journal that only 0.01% of bitcoin holders held the majority of the asset’s supply. It revealed that about 5 million BTC were held in these wallets, leading to an even larger concentration in the distribution of the digital asset when compared to cash. Estimating the 1% of wealthy individuals in the U.S. controlled about 33% of the dollar supply.
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This has sparked debate about if bitcoin is really the equalizer that it is purported to be. For one, there is only 10% of supply left to be mined over the next 120 years and the majority of the already circulating supply of the digital asset is being held by BTC investors who are currently very wealthy given the currently value of the cryptocurrency.
BTC at $46K | Source: BTCUSD on TradingView.com
U.S. Senator Elizabeth Warren is one of those that has openly spoken out about this concentration. The senator does not believe that bitcoin, which is a completely decentralized ecosystem, equally benefits both the rich and the poor.
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Bitcoin Works For The Wealthy
In a recent tweet, Senator Elizabeth Warren called out bitcoin and crypto in general. She questions the financial inclusion that is pushed by the space and linked the WSJ article stating that the supply of BTC is heavily concentrated in a small percentage of wallets. She also points out the fact that it is an even higher concentration of the US dollar.
Related Reading | The Year In Review: An Emotional Rollercoaster For Crypto Investors
In conclusion, Senator Warren states that better solutions are needed to solve financial inclusivity. Pointing out that bitcoin only favors the wealthy.
The crypto industry claims that crypto is the path to financial inclusion, but bitcoin ownership is even more concentrated within the top 1% than dollars. We need real solutions to make the financial system work for everyone, not just the wealthy.https://t.co/8OiHwZEBUz
— Elizabeth Warren (@SenWarren) December 28, 2021
Warren as at various times called for there to be more regulation in the crypto market. The senator has never been shy to air her anti-crypto views and has asked for there to be tighter restrictions placed on the market.
Featured image from Al Jazeera, chart from TradingView.com
Welcome to the latest edition of Cointelegraph’s decentralized finance newsletter.
As the market attempted to recover from last week’s pummeling, decentralized finance (DeFi) was once again the topic of discussion in high-profile U.S. governmental offices. Read on to learn more about this news and much more from the world of decentralized finance.
What you’re about to read is the smaller version of this newsletter designed for brevity. For the full version of DeFi’s developments over the last week, drop your email below.
Senator Warren warns about supposed DeFi dangers
Senator Elizabeth Warren publicly scrutinized the decentralized finance sector this week in a hearing with the Senate Banking Committee.
Speaking on the topic of “Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks,” Warren conversed with Alexis Goldstein, a regulatory expert on financial matters, on the intricacies of stablecoin transactions, including Tether (USDT) and USD Coin (USDC) and whether the former has genuine one-to-one dollar backing.
Following this, the former Democratic presidential candidate questioned Hilary Allen, a professor at the American University Washington College of Law, on whether a run on stablecoins could potentially endanger the country’s financial system.
In response, Allen argued that stablecoins runs, in which speculators of the asset sell on mass, would be akin to that witnessed in money market mutual funds and foreign exchange markets and, therefore, could have wide-ranging consequences for the DeFi ecosystem.
In closing, Warren stated, “DeFi is the most dangerous part of the crypto world,” adding:
“I don’t think DeFi can grow without stablecoins. I think it would struggle. Right now, I think DeFi is contained to the point where it won’t impact financial stability, but if it grows, I think there’s a real threat there, particularly if it becomes intertwined with our traditional financial system.”
Warren’s track record in commenting on the cryptocurrency space follows a consistently predictable pattern that largely insinuates illicit activity within the market, alongside advocacy for robust consumer security in light of sparse regulation.
In June this year, she spoke dramatically about the emergence of central bank digital currencies (CBDC), stating that cryptocurrencies have “created opportunities to scam investors, assist criminals, and worsen the climate crisis” and that a positive solution could be a centralized, federally-backed U.S. digital dollar.
Around the same time as the hearing, Warren became embroiled in an argument with tech titan Elon Musk, accusing the maverick CEO of “freeloading” off the general public after reports emerged about tax contributions among the country’s top earners. Verbal insults were exchanged back and forth between the pair on various mediums, including Twitter.
Please don’t call the manager on me, Senator Karen
— Elon Musk (@elonmusk) December 14, 2021
Related:Elizabeth Warren compares ‘bogus’ crypto to ‘legitimate’ CBDCs in senate hearing
$33.5 billion trapped in Ethereum Beacon Chain contract
An Ethereum Beacon Chain staking contract containing 8,641,954 Ether (ETH), equivalent to $33.5 billion, was discovered to be inaccessible this week without the action of a hard fork, an event in which the details have yet to be finalized.
The Beacon Chain is the inaugural development in Ethereum’s transition to a proof-of-stake mining consensus. One of the prerequisites for becoming a validator on Ethereum 2.0 is to stake at least 32 ETH in the contract. Therefore, a short-term situation has arisen whereby vast sums of capital are stored in a contract that cannot be spent or transferred out.
Once the merger of the Beacon Chain into the Ethereum mainnet is finalized, the transition to Eth2 will be complete. Following this, the hard fork details are expected to be drawn up, creating a solution to what is currently a dormant contract.
Related:Small Ethereum investors increase exposure as ETH loses $4K level
New study finds that 83% of Millennial millionaires own crypto
A survey reported by U.S. news broadcaster CNBC has revealed fascinating insights into the financial portfolios of Millennial millionaires, concluding that a large majority of individuals have invested in the nascent cryptocurrency markets and are expecting to continue doing so for the foreseeable future.
Conducted by Spectrem Group, the survey polled investors with assets in excess of $1 million and found that 83% of them had made crypto investments in their lifetime and that 53% of respondents hold 50% or more of their portfolio in the digital asset market.
George Walper, president of Spectrem Group, noted that traditional organizations have largely failed to recognize the interest from Millennials in the digital economy, stating:
“I’m not sure the wealth management industry has recognized that they need to think of these as completely different generations. Most firms were hoping to ignore it. But millennial millionaires are not going to just grow out of crypto.”
Related:Crypto Could Save Millennials From the Economy That Failed Them
Token performances
Analytical data reveals that DeFi’s total value locked has decreased 13.51% across the week to a figure of $122.89 billion.
Data from Cointelegraph Markets Pro and TradingView reveals DeFi’s top 100 tokens by market capitalization are mostly bearish across the last seven days.
Yearn.finance (YFI) grew a healthy 33.56%. Avalanche (AVAX) rose 22.03%, while Curve DAO Token (CRV) posted gains of 11%. PancakeSwap (CAKE) and Oasis Network (ROSE) claimed fourth and fifth places this week with 8.48% and 5.6%, respectively.
Interviews, features and other cool stuff
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us again next Friday for more stories, insights and education in this dynamically advancing space.
US Senator Elizabeth Warren (D-MA) is issuing a warning against a cryptocurrency subsector that she says poses a grave danger to the economy.
Senator Warren says in a U.S. Senate Banking, Housing, and Urban Affairs Committee hearing on stablecoins that decentralized finance (DeFi) poses the biggest risk to the economy as it is largely unregulated.
“DeFi is the most dangerous part of the crypto world.
This is where the regulation is effectively absent and no surprise it’s where the scammers and the cheats and the swindlers mix among part-time investors and first-time crypto traders.
In DeFi someone can’t even tell if they’re dealing with a terrorist.”
According to the U.S. Senator, DeFi depends on stablecoins and therefore wouldn’t exist without the fiat-pegged cryptocurrencies.
“Stablecoins provide the lifeblood of the DeFi ecosystem.
In DeFi, people need stablecoins to trade between different coins, to trade derivatives, to lend and borrow money all outside the regulated banking system.
Without stablecoins DeFi comes to a halt.”
Senator Warren consequently says that regulators need to act as stablecoins are “propping up” DeFi.
“This is a risk to traders, a risk to our economy.
The time to act is before it all blows up. Stablecoins have no regulators, no independent auditors, no guarantors, nothing. And they are propping up one of the shadiest parts of the crypto world.
The place where consumers are least protected from getting scammed. Our regulators need to get serious about clamping down on these risks before it is too late.”
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Featured Image: Shutterstock/Tithi Luadthong/Natalia Siiatovskaia
US Senator Elizabeth Warren questioned bitcoin mining firm Greenidge Generation Holdings about the impact of its operations on power prices, climate change and the local area as part of her efforts to tackle the negative consequences of cryptocurrency mining on the environment.
Warren, in a letter to CEO of Greenidge Generation Holdings Jeff Kirt, inquired about the aforementioned concerns on Thursday afternoon.
Highlighting her concerns, Massachusetts’ Democratic US senator Warren wrote in the letter stating that: “given the extraordinarily high energy usage and carbon emissions associated with Bitcoin mining, mining operations at Greenidge and other plants raise concerns about their impacts on the global environment, on local ecosystems, and on consumer electricity costs.”
This is the first time that Warren has pushed a specific bitcoin mining firm for information. “We need to better understand how much energy facilities like Greenidge are using, how much they’re emitting into the environment, and what impact they’re having on electricity prices for American consumers,” Warren told Bloomberg media in an email.
Greenidge will respond to Warren to shed light on how “the facility meets all of New York’s nation-leading environmental standards, is bringing economic opportunity to an under-served area of the state and is a model for crypto mining with widespread local support,” the company mentioned in a statement.
Greenidge, which is managed by private equity firm Atlas Holdings LLC, has come under scrutiny for its rising electricity consumption which has increased to almost as much as the entire nation of Argentina’s energy usage.
According to its website, the firm uses low carbon sources of electricity for its mining operations and purchases carbon offsets credits. It also stated that the electricity used for its New York mining plant is generated by natural gas.
Greenidge, which claims to be the first carbon-neutral bitcoin mining company in the US, has one mining facility in upstate New York and has plans to install another one in South Carolina.
Earlier this year, Greenidge’s mining facility in New York obtained much criticism. Environmentalists complained against the idea of the power station burning natural gas to mine Bitcoin and operate its cooling system, alleging that such activities have a negative impact on the local lake.
Big Fight Brewing Over Crypto
Raising issues against Greenidge generation firm is not the first time that Senator Elizabeth Warren has taken aim at the cryptocurrency sector over its adverse impact on consumers, the financial system, and the environment.
The long-standing critic sees cryptocurrency as a new shadow bank. According to her, a shadow bank is a non-bank financial entity that offers services outside the remit of normal banking regulation. In July, Warren – a member of the Senate Banking Committee and a longtime critic of the nation’s largest banks – wrote to the Treasury Secretary Janet Yellen to identify and remedy risks posed by crypto assets and to draft a comprehensive and coordinated framework through which federal agencies can continually regulate virtual coins.
While some investors choose to buy Bitcoin as an investment hedge, Warren also told CNBC media in July that she is sceptical that the cryptocurrency will prove to be a reliable hedge against inflation over the long run. She mentioned that cryptocurrency is not going to have its own inflationary pressures, stating that inflation comes from a different source than what happens with the dollar, and also pointed out the high volatility in the crypto prices.
In September, in a Senate Banking, Housing, and Urban Affairs Committee hearing, Warren argued that the high and unpredictable fees on cryptocurrency present severe risks to investors who have the least money to lose. In response to her question about fees on decentralized crypto exchanges and whether they present a path to greater financial inclusion, U.S. Securities and Exchange (SEC) Commission chairman Gary Gensler told Senator Warren that cryptocurrency does not sound like the path to a more inclusive financial system and instead serves as a highly speculative asset.
As a result, Warren expected chair Gensler and the SEC to take a leading role to ensure that US regulators address crypto’s regulatory gaps and ensure that the nation is building the inclusive financial system that it needs.
Five senators have called for the immediate closure of Facebook’s new crypto wallet just hours after it was launched in a partnership with Coinbase.
Crypto skeptic Senator Elizabeth Warren was one of the five urging Facebook CEO Mark Zuckerberg to “immediately discontinue” the project. In a letter sent to Zuckerberg on Tuesday, the five senators wrote:
“Given the scope of the scandals surrounding your company, we write to voice our strongest opposition to Facebook’s revived effort to launch a cryptocurrency and digital wallet, now branded ‘Diem’ and ‘Novi,’ respectively.”
Diem is Facebook’s ambitious stablecoin project, formerly known as Libra, which has been the subject of heavy scrutiny and regulatory roadblocks for years resulting in a number of key partners pulling out of the venture. Novi is the firm’s crypto wallet, designed to hold the Diem token and other stablecoins.
Novi launched a pilot in the United States and Guatemala on Tuesday in partnership with Coinbase, which will provide crypto custody services. The pilot will enable users to acquire, send and receive Pax Dollars (USDP) through their Novi account.
On Wednesday, Coinbase CEO Brian Armstrong congratulated David Marcus, co-creator and a board member of Diem, adding, “It takes a lot of perseverance to ignore the haters and ship.”
The shot across the bow came from the office of Senator Brian Schatz and was co-signed by Tina Smith, Richard Blumenthal, Banking Committee Chairperson Sherrod Brown and Senator Warren.
They stated that Facebook has repeatedly made conscious business decisions to continue with “actions that have harmed its users and the broader society,” adding:
“Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient.”
Related: One currency to rule them all: Facebook’s Diem has global ambitions
In a letter from the company announcing the pilot, Marcus stated, “We intend to migrate Novi to the Diem payment network once it receives regulatory approval.”
The firm has far loftier ambitions than just a crypto wallet and stablecoin in the digital space. On Sunday, Facebook revealed plans to create 10,000 high-skilled jobs in the European Union over the next five years to build its own metaverse.
Recent dialogue between MakerDAO developers and the office of anti-crypto Senator Elizabeth Warren’s has revealed a concerning lack of familiarity with the current decentralized finance (DeFi) ecosystem.
On Sept. 20, a screenshot began circulating on social media appearing to show dialogue between members of the MakerDAO community discussing the conclusions from a recent meeting between representatives of the project and the office of Senator Warren.
In the screenshot, pseudonymous MakerDAO Governance delegate “PaperImperium” claims to have spent much of the time convincing Warren that Maker is not the same project as The DAO — an infamous early experiment in decentralized autonomy organizations (DAOs) that suffered a major hack before failing in 2016.
MakerDAO delegate @ImperiumPaper and @SenWarren meeting highlight:
“I spent much of the time convincing her we’re not the DAO” pic.twitter.com/ZIUIBwaAEZ
— banteg (@bantg) September 20, 2021
MakerDAO is currently sixth-largest DeFi protocol commanding a total value locked of more than $8.2 billion, according to DeFi Llama.
Despite the confusion, the delegate also concluded that the Senator is “not super interested in us,” adding that they “have a commitment for another meeting” that is expected to take place within roughly three weeks.
While the screenshots shared to social media claim appear to be citing Senator Warren directly, a Sept. 17 thread posted to MakerDAO’s governance forum indicates the project’s delegates would be meeting with Warren’s “economic and banking advisors.”
The meeting comes after increasing efforts from MakerDAO to promote initiatives establishing dialogue between the crypto industry and lawmakers.
Elizabeth Warren has recently become a pariah to the crypto industry, labeling crypto as “the new shadow bank” and a “lousy investment” in recent months.
Earlier this month she suggested it would be “worth considering” prohibiting U.S. banks from holding the reserves to back private stablecoins in a move that could “effectively end the surging market.”
Related: Sen. Warren goes after Ethereum network fees in committee hearing
The DAO was one of the first major projects on Ethereum, launched in 2016 after raising $150 million USD worth of ETH through a token sale. The DAO was hacked due to code vulnerabilities and $60 million in ETH was stolen less than 3 months after it launched.
It was one of the most heavily invested crypto projects to date, having attracted 14% of all circulating ETH at the time.
As a result of the incident, the Ethereum community opted to hard fork Ethereum to reverse the attack, with dissenting voices maintaining the old chain to spawn the Ethereum Classic classic chain.
A statement from Anthony Scaramucci has revealed the total crypto worth of an Alternative investment firm in Australia’s SkyBridge Capital. He stated that SkyBridge holds crypto worth $700 million presently.
The alternative investment firm has filed for a cryptocurrency company ETF which simply means a crypto-based exchange-traded fund.
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They did this on Tuesday, aiming to increase their digital currency offerings. SkyBridge Capital also revealed its plans for the Algorand fund during the SALT conference held within the week in New York.
SkyBridge Crypto Assets Worth
SkyBridge founder Anthony Scaramucci while addressing CNBC, stated that the firm raised over $100 million for the new Algorand fund. Anthony was also the former Director of White House Communications. It was Scaramucci who valued the company’s crypto-assets to be about $700 million.
The CEO reaffirmed that crypto has come to stay. However, he added that if regulations plan to fan the increasing adoption of digital asset technology, they should take quick action.
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Anthony explained the crypto adoption as similar to Uber, which the regulators planned to knock out of the system. But the people later won because they accepted its use. He predicts that the United States will start recording up to 200 million crypto users in no distant time.
The SkyBridge CEO made these comments when spectators were concerned about having a regulatory crackdown maned by SEC.
Gary Gensler, the head of SEC, had characterized the crypto sector as rife associated with abuse and fraud. But Anthony Scaramucci, despite his disagreement, appreciated Gary for his stake in crypto.
He explained that Gary had many people that are yet to understand crypto in Congress fully. As a result, they have a lot of negativity, and he will call on elites like Elizabeth Warren to attend such a conference.
However, sitting with members of the industry will make her understand the protocols better. Anthony suggests that the need to carry everyone alone by educating them.
Other Finance Magnates Opinion
Other finance lords in their speech didn’t share Anthony’s optimism. Instead, they doubted the possibility of crypto adoption outrunning the grip of strong-handed regulations.
Related Reading | While Broader Crypto Market Holds Its Collective Breath, Whales Are Loading Up On Bitcoin
Ray Dalio predicted that as the digital assets popularity increases, it would attract the attention of lawmakers.
ALGO is currently down by 4% at the time of writing | Source: ALGOUSD on TradingView.com
However, while speaking to CNBC, he said that even if the crypto adoption successfully increases, the lawmakers will kill it. He believed that lawmakers would succeed in killing it as they have their ways of doing so.
Dalio explained that every monetary asset that offers a cash alternative is worth considering, including Bitcoin.
Featured image from Finance Magnates, chart from TradingView.com
Gary Gensler of the SEC attended a Senate hearing on cryptocurrency and exchange regulation today.
Senator Elizabeth Warren asked Gensler about the difficulty of withdrawing crypto during exchange outages.
Senator Pat Toomey asked Gensler about the SEC’s unclear stance on whether stablecoins are considered securities.
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Gary Gensler, Chairman of the U.S. Securities and Exchange Commission, attended a Senate hearing today in which he discussed his agency’s stance on cryptocurrency and crypto exchanges.
Coinbase, DeFi Have Withdrawal Risks
During the hearing, Senator Elizabeth Warren asked Gensler about the difficulty of withdrawing cryptocurrency investments in the event of a market crash and cryptocurrency exchange outages.
“Is there anything I could do to get my money out?” Warren asked, using the crypto exchange Coinbase as an example of an exchange that went down during last week’s market crash and outage.
In response, Gensler said that government agencies could do little to help investors because Coinbase had not registered with the SEC. He also implied that it was Coinbase’s responsibility to do so due to the fact that it “may be trading dozens of securities.”
Warren went on to discuss the risks of Ethereum’s high transaction fees, which could make it difficult for users to redeem investments made on DeFi exchanges. “High, unpredictable fees can make crypto trading really dangerous for traders that aren’t rich,” she noted.
She suggested that it is up to agencies like the SEC to regulate those situations, a statement that Gensler concurred with.
Gensler Says Stablecoins May Be Securities
Earlier in the hearing, Senator Pat Toomey criticized the SEC’s unclear handling of stablecoins as securities. Toomey argued that dollar-pegged stablecoins do not seem to fit the definition of securities because they don’t carry the promise of returns.
Earlier this month, the SEC threatened to sue Coinbase over its lending plan, which promised 4% annual interest to users who deposited the USDC stablecoin with the exchange.
Though the conversation did not specifically reference Coinbase and its stablecoin plan, Toomey seemed to allude to that case in particular. “We certainly shouldn’t be taking enforcement action against someone without first providing that clarity,” Toomey said.
Gensler maintained that the laws around securities are currently very broad and that stablecoins “may well be securities.” He did not comment on the SEC’s negotiations with Coinbase.
Disclaimer: At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins.
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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
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