US anti-crypto stanceSenator Elizabeth Warren probably won’t be seen by most in the room. The FTX collapse has given her renewed momentum to intensify her calls for tighter regulation. But what does this mean for the crypto industry?
As news outlet Semafor reported on December 7, the Democratic senator probed a number of crypto-specific issues. According to trusted sources, these include Regulations, taxes, climate and national security of the United States.
According to the report, Senator Warren has significantly increased her legislative efforts in the wake of the FTX collapse. In their eyes, crypto is a tool for criminals to launder money and evade taxes. Last year, she called cryptocurrencies the new shadow bank, suggesting that this asset class is only used by shady characters and criminals.
Elizabeth Warren vs. Crypto
The draft law has not yet been finalized, but already contains one wide range of potential regulations that could make investing in cryptocurrency significantly more difficult for retail investors.
The senator calls for, among other things Audited financial statements from brokers and crypto exchanges and bank-like capital requirements. The latter should help companies cope with financial emergencies, such as the recent crypto contagion.
The bill would also prohibit crypto companies from using customer funds to invest elsewhere. But banks do just that.
In addition, the draft calls for a tightening of the tax reporting obligations that were introduced last year.
A spokesman for the Democrat told the newspaper:
“As Senator Warren previously publicly announced, she is working on crypto legislation. According to them, financial regulators, including the SEC, already have extensive powers to crack down on crypto fraud and illegal money laundering.”
This bill proposes to classify crypto assets as securities. As such, they would be subject to the same rules as corporate stocks, which are even stricter than those governing commodities.
In late November, Warren warned about cryptocurrencies, claiming that without proper regulation they would threaten the entire economy. Financial experts, such as Fed Governor Lisa Cook, take a less dramatic view. Earlier this month, she said new regulation was unnecessary as FTX contagion has not spilled over from cryptocurrencies to traditional finance.
But apparently Senator Warren is firmly convinced of her point of view. She also called on the head of the Department of Justice, Attorney General Merrick Garland, to launch a thorough criminal investigation of FTX.
The erosion of economic freedom
More recently, several lawmakers have pushed for stricter regulations along the lines of traditional finance. However, such rules will also impose the same restrictions on investors as in TradFi.
Intrusive paperwork, collection of personal data and public surveillance would result for any crypto investor – an erosion of financial freedom.
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