Senator Warren Says Crypto Could Solve Big Banks’ ‘Huge Failure’ Not to Serve Millions of Low-Income Americans

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Senator Elizabeth Warren (D-Mass.), A strong advocate for greater regulation of nascent cryptocurrencies, said on Wednesday that digital currencies and especially those issued by central banks could help present the millions of Americans low-income earners who have long been without a bank account to the wider U.S. financial system, apparently signaling support for a growing cryptocurrency supply in Washington.

Senator Elizabeth Warren (D-Mass.) Joins Fed Chairman Jerome Powell in apparently hosting a … [+] dollar.

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Speaking to CNBC’s Squawk Box, Warren, who sits on the Senate Banking and Finance Committees, said central bank cryptocurrencies and digital currencies “could be an answer” to “the massive failure of the big banks to reach consumers “.

Warren said cryptocurrencies with “extremely low transaction costs” could make them a viable medium of exchange for the 15 million Americans who the Federal Reserve says do not have a bank account and therefore have to pay intermediaries to cash their paychecks or pay their bills.

Warren highlighted his concerns about cryptocurrencies focused on “bad players” and not the space itself, saying that a “totally unregulated market” has allowed “big guys to profit … and a unprecedented volatility.

Her comments were very different from a letter she sent to the Treasury Department on Monday, when Warren urged Treasury Secretary Janet Yellen to lead “a coordinated and cohesive regulatory strategy” to help mitigate “growing risks “that cryptocurrencies pose to the financial market. .

In the letter, she noted that “some” cryptocurrencies are very volatile and their growth could raise financial stability issues and liquidity, credit and operational risks that banks face.

Crucial quote

“Once we have really had a [Food and Drug Administration] who stood up and said you know what, we’re going to test these drugs before they hit the market and then look at what happened: we got a lot more investment and a much bigger market that has helped the whole world, ”Warren said Wednesday, citing the pharmaceutical industry in its call for tighter crypto regulation. “I don’t want to wait until the small investors and many small traders are completely wiped out.”

What to watch out for

During a congressional hearing earlier this month, Fed Chairman Jerome Powell said the Fed’s much-anticipated report on central bank digital currencies would be released in early September. Although he has long insisted that the Fed is not rushing into space, Powell said the report will outline the risks and rewards of Federal Reserve-backed cryptocurrencies and even suggested that a US digital currency could make other cryptocurrencies obsolete. “You wouldn’t need stablecoins, you wouldn’t need cryptocurrency if you had an American digital currency. I think that’s one of the strongest arguments in its favor.”

Crucial quote

“Digital currencies, whether issued by central banks or privately issued with safe and liquid backing, seem inevitable,” Bank of America analysts wrote in a note to clients on Wednesday, adding that central banks in particular “have the power and the will to prevent a very bad outcome in terms of collateral damage” in the financial system. They note that the two biggest technological challenges facing central bank digital currencies are scalability and offline availability.

Further reading

Fed Chairman Suggests Bitcoin Could Become Obsolete If America’s Digital Currency Existed (Forbes)

Senator Warren calls for a “coordinated and holistic” response to the “dangers” of crypto (CoinDesk)

Fed Chairman Powell Says Digital Dollar ‘High Priority Project’ (forbes) (Forbes)

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