In her latest submission to the US Senate Banking, Housing, and Urban Affairs, Senator Elizabeth Warren urged regulators to deal with the DeFi industry and pay more attention to stablecoins.
Warren Calls DeFi Dangerous
While discussing decentralized finance markets, Senator Warren openly stated she believes it’s one of the most dangerous places in the cryptocurrency industry.
Based on her opinion, DeFi is a place filled with scammers, cheats, and swindlers that meet new, innocent investors and traders. Warren also believes DeFi markets are places where investors can’t quite know who they’re dealing with. Warren stated that someone might even be dealing with a terrorist and not be aware of it.
She also established a relationship between DeFi and stablecoins. Warren noted that the DeFi niche wouldn’t survive without stablecoins, since those are the tools used for transactions on DeFi platforms.
According to her, people need stablecoins in DeFi. They allow users to trade derivatives, coins, lend and borrow money, and remain outside of the regulated banking system.
Warren also raised the question of whether the DeFi niche can lead to economic instability.
Stablecoins Have Questionable Backings
The Senator also noted that many stablecoins have questionable backings and proceeded to discuss Tether (USDT). For example, the Tether report wasn’t verified or audited by any government agency. This led Warren to describe stablecoins as not always being what they claim to be.
Additionally, she stated that if stablecoins’ issuers were to crash, they could crash the economy.