The crypto market crash and the related outages on bitcoin exchanges underscore the need for regulation of the industry by the U.S. Securities and Exchange Commission (SEC). expressed the view by Senator Elizabeth Warren at a Banking Committee hearing.
“In a matter of hours, $400 billion in market value simply evaporated,” she noted.
The senator cited a hypothetical retail investor who lost money amid the market decline. According to her, he could have invested right before the crash, and then tried to withdraw his remaining funds. However, crypto exchanges, including Coinbase, were unavailable.
SEC Chair Gary Gensler agreed with Warren that retail investors lack tools to resolve the situation, as exchanges are not regulated by federal law.
According to the senator, fees for swapping tokens on decentralized platforms after the market drop cost users more than $500.
Earlier, the SEC warned Coinbase of legal action if it launches crypto-savings accounts based on USD Coin (USDC) at 4% per year, due to their treatment as securities.
In response to the regulator’s statement, former chairman of the U.S. Commodity Futures Trading Commission Christopher Giancarlo emphasised the need for clearer rules for the crypto industry.
Earlier in September, Warren described cryptocurrencies as “new shadow banks”. Gensler said that regulation is necessary for the survival of digital assets.
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