Warren calls on Congress to help the SEC fight crypto fraud
- Senator Elizabeth Warren, D-MA, on Wednesday praised Securities and Exchange Commission Chairman Gary Gensler’s efforts to curb the cryptocurrency market, but said the regulator still needs to do more to tighten its grip on the industry in an effort to combat fraud.
- In a speech to the virtual event hosted by the American Economic Liberties Project and Americans for Financial Reform, Warren said the SEC also needs more support from Congress and called on other regulators to step up enforcement in the digital assets sector.
- Warren, an outspoken critic of the cryptocurrency industry, has previously called on the SEC to exert more authority over the sector. His remarks follow a November editorial in the Wall Street Journalwhere he encouraged the agency to “dress up” in its fight against crypto fraud.
“The commission has been loud and clear that cryptocurrencies do not get a pass under long-standing security laws that protect investors and ensure the integrity of our financial markets,” Warren said Wednesday. “This is the right approach. The SEC has the right rules and the right experience, and Gary Gensler is proving to be the right leader to get the job done.”
However, Warren added, the regulator must “use the full force of its regulatory powers across the entire cryptocurrency market.”
The remarks echo Warren’s November op-ed, in which he said the regulator has failed to exert its authority over the growing cryptocurrency industry.
“[P]The flower has no value if the policeman on duty does not use it,” he wrote. “The SEC has launched some enforcement actions related to fraudulent and unregistered cryptocurrency offerings in recent years, but has fallen far behind as the cryptocurrency industry has attracted millions of new investors.”
The responsibility for fighting crypto-related fraud shouldn’t fall solely on the SEC, Warren said on Wednesday, adding that the industry was allowed to grow unchecked under Trump-era regulators.
“Gensler was faced with a critical task of putting the genie back in the bottle and bringing the crypto ecosystem into regulatory compliance after Trump regulators allowed it to explode,” Warren said. “The fallout from Trump’s regulator weakness came as no surprise: By 2017, nearly 80% of all initial coin offerings [were] rip-offs. The following year, investors lost about $9 million a day to crypto scams.”
Warren called on banking regulators to step up oversight of the space, referencing crypto-heavy bank Silvergatewhich was forced to sell loss-making assets this month to cover about $8.1 billion in withdrawals after the collapse of cryptocurrency exchange FTX triggered a bank run.
“Our bank regulators are also part of this fight,” he said. .”
Warren also called on Congress to provide the SEC with the resources it needs to ensure it can regulate the cryptocurrency market.
“In pockets of this market where regulators may not have the authority they need, Congress should provide the tools to get the job done,” he said. “We can see risks to financial stability, but in the dark recesses of the cryptocurrency world, the threat to our national security is growing.”