Crack down on cryptocurrency

Warren urges Yellen to crack down on cryptocurrency

Warren said "cryptocurrencies currently touch or can ripple through nearly every corner of the financial system."

By KELLIE MEJDRICH

Sen. Elizabeth Warren is pressing Treasury Secretary Janet Yellen to rally federal agencies to develop a "coordinated and cohesive regulatory strategy" on cryptocurrencies, which the Massachusetts Democrat says pose growing risks to the financial system.

Warren told Yellen in a letter released Tuesday that she should tap the Financial Stability Oversight Council — a panel of top regulators that the Treasury secretary chairs — to "act with urgency."

Warren said "cryptocurrencies currently touch or can ripple through nearly every corner of the financial system," with more than 2,000 digital currencies in circulation and a market value that could exceed $2 trillion. She cited specific concerns with so-called stablecoins, decentralized finance, exposure to hedge funds and risk to banks.

"FSOC should review this matter and determine whether it is appropriate to utilize its statutory authority to contain the systemic risks posed by the growing cryptocurrency market," she said. "The longer that the United States waits to adapt the proper regulatory regime for these assets, the more likely they will become so intertwined in our financial system that there could be potentially serious consequences if this market comes under stress."

Warren released the letter in advance of a Senate Banking Committee hearing on cryptocurrency Tuesday morning. Separately on Tuesday, the Senate Judiciary Committee was set to hold a hearing focused on ransomware and the House Financial Services Committee was set to hold a hearing on central bank digital currency.

Warren has also urged SEC Chair Gary Gensler to look into the risks posed by crypto and urged him to respond to questions by this week.