Sen. Warren Says Crypto Could Solve Big Banks’‘Enormous Failure’ Of Not Serving Millions Of Low-Income Americans
Sen. Elizabeth Warren (D-Mass.), a vocal advocate for more regulation of nascent cryptocurrencies, said Wednesday that digital currencies—and particularly those issued by central banks—could help introduce the millions of of low-income Americans who’ve long gone without bank accounts to the broader U.S. financial system, seemingly signaling support for a cryptocurrency offering that’s picking up steam in Washington, D.C.
Speaking to CNBC’s Squawk Box, Warren, who sits on the Senate’s banking and finance committees, said cryptocurrencies and central bank digital currencies “may be an answer” to the “enormous failure by the big banks to reach consumers.”
Warren said cryptocurrencies’ “extremely low transaction costs” could make it a viable means of exchange for the 15 million Americans who, according to the Federal Reserve, don’t have bank accounts and must therefore pay intermediaries to get their paychecks cashed or pay bills.
Warren emphasized that her concerns about cryptocurrencies center on “bad actors” and not the space itself, saying a “wholly unregulated market” has allowed “big guys to take advantage . . . of small investors and taxpayers”—a jab at the market’s outsize retail interest and unprecedented volatility.
Her comments were a vastly different tune 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 the “growing risks” cryptocurrencies pose to the financial market.
In the letter, she noted “some” cryptocurrencies are highly volatile and that their growth could raise financial stability concerns and liquidity, credit and operation risks faced by banks.
“Once we really had a [Food and Drug Administration] that stood up and said you know what? We’re going to test these drugs before they go on the market . . . then look what happened: We got a whole lot more investment and a much bigger market that helped the entire world," Warren said Wednesday, invoking the pharmaceutical industry in her call for tighter crypto regulation. “I don’t want to wait until small investors and a lot of small traders have been completely wiped out.”