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The Democratic Senator Elizabeth Warren wants to take action against decentralized finances (Defi) and stablecoins. She urged the financial regulators to act accordingly.

In a Senate committee, the Senator called on the regulatory authorities to take massive action against decentralized financial platforms and stablecoins “before it’s too late.” Because: “Defi is the most dangerous part of the crypto world … this is where the scammers, the fraudsters and the swindlers get mixed up the part-time investors and crypto beginners. “

She also mentioned the stablecoins USD Coin (USDC) and Tether (USDT), which are also used by Bitcoin Era be used. In response to the Senator, Alexis Goldstein, director of financial policy at the Open Markets Institute, stated that stablecoins “are not always one-to-one secured … because the assets that secure these tokens are often not real dollars.”

The Senator pointed out that, according to Tether, “only about 10 percent of the assets that the stablecoin is backed with are real dollars in the bank. 90 percent is something else – not real dollars. ”In addition, the Democrat emphasized that the report“ is not really checked by a comprehensive audited financial report or by a state regulatory agency. ”

In addition, the top US politician stated that “stablecoins are not always stable”. Because: “It’s worse than that. In difficult economic times, the likelihood is greatest that people will get out of risky financial products and switch to real dollars.

Stablecoins will dive right when people need stability most, and that run-on-the-bank mentality could ultimately crash our entire economy. “Warren stated,” Defi is the most dangerous part of crypto World.

There is practically no regulation here, and – no surprise – this is where the scammers mix with the part-time investors and crypto beginners. Damn, in the Defi you can’t even tell whether you’re dealing with a terrorist. “

She also said: “Stablecoins are the lifeblood of the Defi ecosystem. In Defi, people need stablecoins to trade between different coins, to trade derivatives, to borrow and lend money – all outside of the regulated banking system. Without stablecoins, Defi comes to a standstill. “

Sources: PublicDomain on December 24th, 2021

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