The cryptocurrency market requires tighter regulation to benefit small-scale investors and enable the government to push back on the whale-ridden market, according to Senator Elizabeth Warren.
The Chair of the Senate Banking Subcommittee made the remarks during an interview with CNBC, adding that heavy money movers often manipulate the price of crypto assets like bitcoin by taking advantage of lax crypto-regulatory guidelines.
According to Warren, the lack of sufficient regulation in the crypto market attracts illegal trading practices leading to indicators that do not reflect the real market conditions. This in turn leads to heavy losses from ordinary traders.
“Who takes advantage of there being no rules? It is the big guys. Who wins when there’s no cop on the beat. It’s the big guys. That’s the part I care about and I care about it happening before a lot of people have been wiped out.”
Crypto regulation for protecting genuine investors
Warren compared the current condition of the cryptocurrency market to the drug market before the formation of the Food and Drug Administration in the early 1990s, which played a crucial role in regulating medicines and treatments.
Once the FDA assured the safety of products to the public, the sector attracted more investments and ignited tremendous market growth.
“I want people to have the freedom to invest. I just don’t want a system where the big guys, where the shadowy guys, where the guys you never quite see, can get out there and do pump-and-dump.”
Warren also addressed the question as to whether imposing more regulation will not impede the growth of the still-young cryptocurrency market. She said that the regulation would be aimed at people with ill intentions such as those perpetrating pump and dump schemes and other illegal activities.
Cryptocurrencies vs. Elizabeth Warren
Despite the call to regulate Cryptocurrencies, Warren has often expressed her distaste for the emerging assets class.
Inside the financial markets, the traditional market sector frowns upon crypto assets due to their high volatility, insufficient regulation, and low market cap which make them susceptible to manipulation compared to other markets.
Other groups including environmentalists point out the huge global warming impact from Cryptocurrencies like Bitcoin which consume a lot of energy and emit a lot of heat during the mining process.
In June, the senator said that Bitcoin is the leading environmentally wasteful cryptocurrency and its crackdown together with other similar Cryptocurrencies would go a long way towards the fight against climate change.
The remarks also come as her deadline to the US SEC to provide its position on crypto-regulation came to an end on 28 July.