US Senators Fail to Find Stable Ground on Stablecoins
Stablecoins are not used to pay for real-world goods or services, but are instead a speculative tool for the “shadiest part of the crypto ecosystem,” Democratic Senator Elizabeth Warren said during a hearing on stablecoins in the US Senate Banking Committee yesterday. Others, meanwhile, stressed that stablecoins are likely safer than traditional banks, and that it would be “inappropriate” to regulate them as banks.
Referring to lending and borrowing of crypto in the decentralized finance (DeFi) space, Senator Warren, who is well-known as one of Congress’s harshest crypto critics, said stablecoins are used to “lubricate speculation in the shadiest part of the crypto ecosystem.”
The Senator from Massachusetts then went on to bash bitcoin (BTC) and cryptoassets more broadly, saying bitcoin “is not backed by anything but hype.”
The comment about bitcoin came before Senator Warren turned to Under Secretary of the Treasury for Domestic Finance, Nellie Liang, who was the only witness to testify during the hearing, telling her: “I worry that you’re approaching the crypto market with blinders on.”
“You talk a lot about the benefits of stablecoins […],” but not about “the risks that are flashing bright red in our faces […]. Congress need to put guardrails around crypto,” the Senator said.
The hearing, which discussed a report on stablecoins from the President’s Working Group (PWG) on Financial Markets, was moderated by Democratic Senator Sherrod Brown, who chairs the Senate Banking Committee.
In his opening remarks, Senator Brown stressed that regulation of the emerging stablecoin market is necessary in order to protect American consumers.
“We need a strong, proactive approach from regulators and Congress to limit stablecoins’ risks for
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