elizabeth warren - Pwim.Net

Elizabeth Warren Urges Treasury Secretary Yellen to Implement Strong AML/CFT Measures for Stablecoins

In a letter addressed to Treasury Secretary Janet Yellen, US Senator Elizabeth Warren has expressed her support for the implementation of robust Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures for stablecoins. Warren’s letter emphasizes the importance of adopting the full suite of AML tools requested by the Treasury Department in a November 2023 letter to Congress.

Warren highlights the growing threat that cryptocurrencies, particularly stablecoins, pose to national security. She specifically mentions the reliance of Iran and Hamas on crypto to fundraise and finance terrorist attacks. To effectively combat this threat, Warren argues that any new crypto legislation must include the comprehensive AML/CFT authorities requested by the Treasury Department.

The Senator references Deputy Secretary Adewale O. ‘Wally’ Adeyemo’s testimony before the Senate Committee on Banking, Housing, and Urban Affairs, where he emphasized the need for additional AML authorities to counter the threat posed by cryptocurrencies. Warren points out that excluding key players in the digital asset ecosystem, such as miners and validators, from AML/CFT requirements would allow bad actors to profit from the increased crypto trading facilitated by stablecoin legislation.

Warren’s stance on the regulation and oversight of crypto aligns with her previous efforts to rein in illegal activities and protect consumers, the financial system, and national security. She has been an advocate for closing loopholes in AML rules that allow sanctioned entities like Iran to earn revenue through crypto transactions. Additionally, Warren has raised concerns about the use of crypto in terrorist financing and has called for stronger rules to protect consumers and national security in stablecoin-related legislation.

Image source: Shutterstock

U.S. Senator Warren Urged To Regulate Cryptocurrencies

U.S. Massachusetts Senator Elizabeth Warren recently took a firm stand against cryptocurrency.

In a congressional hearing for the Senate Banking, Housing and Urban Affairs Committee’s Subcommittee on Economic Policy on Wednesday, June 9, Warren said that cryptocurrency has significant problems for four reasons: illegal activity, investment issues, price fluctuation, and cost to the environment.

Warren, who is well known for her critiques of Wall Street and the formation of the Consumer Financial Protection Bureau, stated that crypto assets had created opportunities to assist criminals, scam investors, and worsen the environmental crisis.

“The threats posed by crypto show that Congress and federal regulators can’t continue to hide out, hoping that crypto will go away. It won’t. It’s time to confront these issues head-on,” the Massachusetts senator said.

During the hearing, Warren asked Dr. Neha Narula, Director of the Digital Currency Initiative at the Massachusetts Institute of Technology, if the cryptocurrency system was reliable and stable. Narula said: “No, it is not, unfortunately,” citing the value of the entire crypto assets have dropped by about 40% over the last two months.

Warren responded: “It means the grocery store could take $100 in Bitcoin to pay for groceries, but by the end of the day, the Bitcoin could be worth only $60, in which case the store loses out.”

Warren also said that within the last two months, the value of Dogecoin rose by more than ten times and then dropped by almost 60%, stating the meme cryptocurrency may work for speculators and fly-by-night investors, but not for ordinary people who are looking for a stable source of value to get paid to use for day-to-day spending.

Besides that, Warren admitted that the traditional banking system has cut out Americans, particularly people of colour, saying that 33 million households are unbanked or underbanked.

She pointed out that CBDC is preferable to cryptocurrency, citing the central bank digital currency as a great promise to serve as a public alternative to cryptocurrencies.

While Warren attempts to discourage crypto in the US, El Salvador adopted Bitcoin as a legal tender early this week.

Tough Regulations Coming

Recently, many things have happened within the crypto markets. For example, China shut down cryptocurrency mining and began censoring crypto exchanges last month. This week, US senators and CFTC commissioners attacked cryptocurrencies. Specifically, Senator Warren stated that it is the right time for the US to start regulating alternative currencies.

Such developments come when the US government agencies are urgently working together in a joint regulatory framework for cryptocurrencies. Last month, a report showed that the OCC (Office of the Comptroller of the Currency) and the FDIC (Federal Deposit Insurance Corporation) started working together on addressing issues related to cryptocurrency and developing views on crypto regulations.

Meanwhile, the Treasury Department said that it was taking steps to impose a crackdown on cryptocurrency transactions and markets, stating that it will require any transfer worth $10,000 and more to be reported to the Internal Revenue Service.

Jerome Powell, US Federal Reserve chief, recently said that cryptocurrency poses risks to financial stability, citing greater regulation of the increasingly popular digital asset may be warranted.

Meanwhile, Hester Peirce, “crypto mum” and SEC commissioner, recently spoke out against attempts by US authorities to regulate cryptocurrencies more strictly, warning that doing so risks discouraging investors.

Sen. Warren Nudges Treasury Sec, Regulators to Address Crypto-Related Risks

U.S. Democrat Senator Elizabeth Warren and a member of the Senate Banking Committee has sent a letter to Treasury Secretary Janet Yellen on the subject of stemming risks associated with cryptocurrencies.

The letter, sighted by CNBC, was addressed to Yellen per her role as the chair of the Financial Stability Oversight Council (FSOC). The nudging seeks to press on other members of the committee who are also market regulators to create a framework through which the broader department of the government will interact with the crypto ecosystem.

“FSOC must act quickly to use its statutory authority to address cryptocurrencies’ risks and regulate the market to ensure the safety and stability of consumers and our financial system,” the Massachusetts Democrat congresswoman wrote in a letter to Yellen. “As the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system, consumers, the environment, and our financial system are under growing threats.”

Digital currencies have come to stay. However, the threats they pose gives regulators and government stakeholders a major concern. From the embrace of Bitcoin (BTC), Ethereum (ETH), and stablecoins in payment systems to the threats to the banks posed by decentralised finance (DeFi), regulators want the crypto ecosystem to come under the same or related regulations other market sectors face.

Warren highlights major risks that cryptocurrencies pose, including exposure to hedge funds that lack transparency, the threats from Stablecoins, and the use of digital currencies in cyberattacks. These, the lawmaker believes the FSOC can help forestall drawing strength from its composition or membership, including veterans from the Securities and Exchange Commission (SEC), the Federal Reserve, and the Commodities Future Trading Commission (CFTC).

However, the clamour for crypto regulation has advised not to be used as leverage to remove strangle financial innovation on American shores. Senators Pat Toomey of Pennsylvania and Cynthia Lummis of Wyoming are amongst the proponents of this latter position.

US Senator Questions Bitcoin Mining Firm on Environmental Impact

US Senator Elizabeth Warren questioned bitcoin mining firm Greenidge Generation Holdings about the impact of its operations on power prices, climate change and the local area as part of her efforts to tackle the negative consequences of cryptocurrency mining on the environment.

Warren, in a letter to CEO of Greenidge Generation Holdings Jeff Kirt, inquired about the aforementioned concerns on Thursday afternoon.

Highlighting her concerns, Massachusetts’ Democratic US senator Warren wrote in the letter stating that: “given the extraordinarily high energy usage and carbon emissions associated with Bitcoin mining, mining operations at Greenidge and other plants raise concerns about their impacts on the global environment, on local ecosystems, and on consumer electricity costs.”

This is the first time that Warren has pushed a specific bitcoin mining firm for information. “We need to better understand how much energy facilities like Greenidge are using, how much they’re emitting into the environment, and what impact they’re having on electricity prices for American consumers,” Warren told Bloomberg media in an email.

Greenidge will respond to Warren to shed light on how “the facility meets all of New York’s nation-leading environmental standards, is bringing economic opportunity to an under-served area of the state and is a model for crypto mining with widespread local support,” the company mentioned in a statement.

Greenidge, which is managed by private equity firm Atlas Holdings LLC, has come under scrutiny for its rising electricity consumption which has increased to almost as much as the entire nation of Argentina’s energy usage.

According to its website, the firm uses low carbon sources of electricity for its mining operations and purchases carbon offsets credits. It also stated that the electricity used for its New York mining plant is generated by natural gas.

Greenidge, which claims to be the first carbon-neutral bitcoin mining company in the US, has one mining facility in upstate New York and has plans to install another one in South Carolina.

Earlier this year, Greenidge’s mining facility in New York obtained much criticism. Environmentalists complained against the idea of the power station burning natural gas to mine Bitcoin and operate its cooling system, alleging that such activities have a negative impact on the local lake.

Big Fight Brewing Over Crypto

Raising issues against Greenidge generation firm is not the first time that Senator Elizabeth Warren has taken aim at the cryptocurrency sector over its adverse impact on consumers, the financial system, and the environment.

The long-standing critic sees cryptocurrency as a new shadow bank. According to her, a shadow bank is a non-bank financial entity that offers services outside the remit of normal banking regulation. In July, Warren – a member of the Senate Banking Committee and a longtime critic of the nation’s largest banks – wrote to the Treasury Secretary Janet Yellen to identify and remedy risks posed by crypto assets and to draft a comprehensive and coordinated framework through which federal agencies can continually regulate virtual coins.

While some investors choose to buy Bitcoin as an investment hedge, Warren also told CNBC media in July that she is sceptical that the cryptocurrency will prove to be a reliable hedge against inflation over the long run. She mentioned that cryptocurrency is not going to have its own inflationary pressures, stating that inflation comes from a different source than what happens with the dollar, and also pointed out the high volatility in the crypto prices.

In September, in a Senate Banking, Housing, and Urban Affairs Committee hearing, Warren argued that the high and unpredictable fees on cryptocurrency present severe risks to investors who have the least money to lose. In response to her question about fees on decentralized crypto exchanges and whether they present a path to greater financial inclusion, U.S. Securities and Exchange (SEC) Commission chairman Gary Gensler told Senator Warren that cryptocurrency does not sound like the path to a more inclusive financial system and instead serves as a highly speculative asset.

As a result, Warren expected chair Gensler and the SEC to take a leading role to ensure that US regulators address crypto’s regulatory gaps and ensure that the nation is building the inclusive financial system that it needs.

Senator Elizabeth Warren Leads Inquiry Into Fidelity's Bitcoin-Backed Retirement 401(k) Account

In the wake of the launch of a Bitcoin-focused 401(k) account- a retirement plan- in the United States by Fidelity Investments, two Senators – Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, have expressed concerns over the company’s latest products and this was contained in a letter to the firm’s Chief Executive Officer, Abigail Johnson.

As contained in the Senator’s letter, a demand was placed on Abigail to explain some of the inherent risks that are associated with the launch of the Bitcoin-backed product to American workers. The senators demanded that Fidelity clarify the risks involved in the 401(k) investments and how the company will address these risks.

Additionally, the Senators demanded to know how the firm will address the susceptibility of Bitcoin to manipulation as well as “the additional Bitcoin risks identified by DOL, including the challenge for plan participants to make (an) informed investment.”

Fidelity’s push to extend the investment into 401(k) was said to be based on growing demand from employees. Despite the firm clarifying that it will charge no fees for the service, the Senators still demanded to know if the proposed customers would need to worry about any fees at all.

In the prior announcement, Fidelity said it would only permit about 20% of a particular client’s portfolio to be invested in digital currencies, however, the claim of popular demand has mainly been faulted by the Senators who wrote;

“Despite a lack of demand for this option — only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu – Fidelity has decided to move full speed ahead with supporting Bitcoin investments.”

It is not uncommon to find some Senators expressing dissatisfaction about anything relating to Bitcoin, drawing on the fact that it is a Proof-of-Work (PoW) coin with a high Carbon footprint. With Fidelity’s investment offering now being questioned, time will show whether true organic demands fueled the launch of the product or not.

Senator Warren Focuses on Crypto Scam Risks for Seniors, Advocates New Legislation

Senator Elizabeth Warren emphasized the growing danger of cryptocurrency scams targeting seniors. Steve Weisman, a cybersecurity expert, supported Warren’s proposed Digital Asset Anti-Money Laundering Act, aimed at curbing these scams.

Warren highlighted a shocking 350% surge in crypto investment scams targeting seniors, resulting in losses over $1 billion. The FBI reported that crypto scams led investment fraud in the United States in 2022, totaling $2.5 billion in stolen funds.

Weisman, Scamicide.com Editor and Bentley University Senior Lecturer, explained seniors’ susceptibility to crypto scams. He cited studies indicating a diminished skepticism in older age, making seniors more prone to fall for these scams, which often involve promises of high returns or fraudulent recovery offers.

The allure of crypto for fraudsters lies in its anonymity and speed, making it challenging to track and recover funds. Weisman detailed various scam methods, including ransom demands, fake investment platforms, and AI-enhanced frauds. The anonymity of cryptocurrencies and their use in mixers complicates the tracking of fraudulent activities.

Senator Warren’s bipartisan legislation, endorsed by AARP and supported by 14 other Senators, aims to equip financial regulators with tools to monitor and act against suspicious crypto activities. Weisman strongly endorsed the Act, stressing the need for updated laws to keep pace with technological advancements.

The media has highlighted the Act’s potential to significantly reduce crypto scams. The law would bring digital assets under the same Anti-Money Laundering regulations as traditional currencies. The recent rise in crypto-related breaches and scams underscores the urgency of this legislation.

Senator Warren, with increasing support from other senators, is pushing for prompt action against the rampant crypto crimes affecting the senior population. The bipartisan support for the Act signifies a united front against these growing financial threats.

Circle Formally Refutes Allegations of Illicit Financing and Connections to Justin Sun

Circle, a leading issuer of stablecoins, has recently addressed and strongly refuted allegations regarding its involvement in illicit financing and alleged connections with Justin Sun, the founder of Tron. These claims, brought forward by the nonprofit watchdog organization, Campaign for Accountability (CfA), prompted Circle’s Chief Strategy Officer and Head of Public Policy, Dante Disparte, to write a formal response to U.S. Senators Elizabeth Warren and Sherrod Brown.

In the letter, Disparte emphatically denies any involvement of Circle in facilitating or financing activities related to Hamas or any other illicit actors. He highlights Circle’s unwavering commitment to combating illicit financial activities. Circle has been an active partner with regulators and law enforcement in the United States, Israel, and other jurisdictions, ensuring that their stablecoin, USDC, is not used for illicit activities. The company’s dedication to legal compliance was recently acknowledged by the U.S. Secret Service, recognizing Circle’s efforts in identifying fraud and assisting in fund recovery.

Addressing specific allegations, Disparte referred to an incident where the National Bureau for Counter Terror Financing of Israel identified digital wallets linked to the Palestinian Islamic Jihad (PIJ) with assets amounting to $93 million. A report by the blockchain firm Elliptic initially suggested that all assets in these wallets were used to finance PIJ, but this was later corrected. Public blockchain ledgers revealed that of the $93 million, only $160 in USDC was transferred among those wallets, and none of that amount originated from Circle. This example underscores Circle’s stance against the misrepresentation of its role in alleged illicit activities.

Furthermore, Circle clarified its relationship with Justin Sun, stating that it does not provide banking services to him or his associated entities, including the TRON Foundation or Huobi Global. Despite the absence of specific designations by the U.S. government, Circle terminated all accounts associated with Mr. Sun and his affiliated companies in February 2023.

Circle also emphasized its status as a highly regulated financial entity. It operates under the regulatory frameworks of multiple U.S. states and federal bodies, including the Ohio Department of Commerce Division of Financial Institutions and the New York Department of Financial Services. As a Money Services Business registered with FinCEN, Circle adheres to the Bank Secrecy Act, anti-money laundering laws, and other regulatory standards. This regulatory compliance is a cornerstone of Circle’s operations, reflecting its commitment to legal and ethical business practices.

In its advocacy for regulatory reforms, Circle has been a vocal proponent for a comprehensive federal framework governing stablecoins. The firm has actively participated in legislative processes, seeking to establish robust reserving, redemption, disclosure, liquidity, and operational risk management standards for stablecoin issuers. Circle’s CEO, Jeremy Allaire, has testified before Congress, advocating for standards that would elevate the safety and reliability of stablecoin issuers.

Circle’s response to the allegations made by the CfA is a strong affirmation of its dedication to regulatory compliance and ethical practices in the digital assets space. The company remains committed to collaborating with regulatory bodies to enhance the regulation of digital asset markets and to combat money laundering and terrorism financing effectively.

Coinbase Counters Senator Warren's Allegations

Cryptocurrency exchange Coinbase has recently confronted allegations by Senator Elizabeth Warren regarding the employment of former government officials. Warren’s claims suggest that these hires may hinder the progress of digital asset regulations. Coinbase, represented by Chief Policy Officer Faryar Shirzad, has fervently denied these allegations. In a response dated December 22, 2023, Shirzad emphasized that Coinbase continues to responsibly and actively advocate for regulatory measures within the crypto industry. Contradicting Warren’s assertions, he insisted that the accusation of undermining bipartisan cryptocurrency legislation is baseless and a misrepresentation of Coinbase’s intentions. Shirzad highlighted the exchange’s pride in its team of national security experts, who are dedicated to protecting Americans. This recruitment, according to Coinbase, is part of a broader initiative aimed at safeguarding the well-being of crypto users in the United States. Senator Warren, in her letters to Coinbase and other industry groups, pointed out the recruitment of high-profile figures such as former Defense Secretary Mark Esper and Bush counterterrorism adviser Frances Townsend, among others. These individuals now serve on Coinbase’s Global Advisory Council. Warren critiqued this as an exploitation of the “revolving door,” claiming it aims to establish a semblance of legitimacy while resisting regulations designed to restrict the use of crypto for terror financing. Responding to Warren’s concerns, Coinbase emphasized the quality of their hires and supported “responsible regulation and legislation” in the cryptocurrency space. The company also warned against the potential risks of driving crypto legislation offshore, drawing parallels to the semiconductor and mobile phone technology sectors. Moreover, Coinbase invited Warren for a comprehensive briefing on their efforts against terrorist financing. Blockchain Association CEO Kristin Smith and Coin Center Executive Director Jerry Brito also responded to Warren’s letter, emphasizing the fundamental rights to associate and petition the government. They highlighted that the engagement of industry experts is crucial for advocating against legislative proposals believed to be unconstitutional and detrimental. The debate between Coinbase and Senator Warren underscores the complex dynamics of regulation in the burgeoning cryptocurrency market. While Coinbase asserts its commitment to responsible regulation and the protection of users, Warren’s concerns reflect broader apprehensions about the intersection of former government officials and industry lobbying efforts. This dispute illuminates the ongoing tension between the crypto industry’s desire for autonomy and the government’s regulatory objectives.

SEC Faces Criticism from Elizabeth Warren over Bitcoin ETF Approvals

U.S. Senator Elizabeth Warren, representing Massachusetts and a member of the Senate Banking Committee, has publicly condemned the Securities and Exchange Commission (SEC) for its approval of 11 spot bitcoin exchange-traded funds (ETFs). This decision by the SEC has sparked a significant debate regarding the integration of cryptocurrencies into the mainstream financial system and the need for comprehensive regulatory frameworks.

Senator Warren, known for her cautious approach towards cryptocurrencies, argued that the SEC’s decision was “wrong on the law and wrong on the policy.” She believes that allowing cryptocurrencies to penetrate deeper into the financial system without strict anti-money laundering regulations poses a significant risk. In response, Warren has been actively promoting her Digital Asset Anti-Money Laundering Act, aiming to extend the Bank Secrecy Act requirements to digital asset entities. She stated,

If the SEC is going to let crypto burrow even deeper into our financial system, then it’s more urgent than ever that crypto follow basic anti-money laundering rules.

The act, reintroduced in October, has gained support from 19 Senators, including two Republicans. However, it has faced criticism from some members of the crypto industry who argue that it could stifle innovation and drive companies offshore.

Warren’s critique comes amid mixed reactions from other lawmakers. Some, like House Financial Services Committee Chairman Patrick McHenry, R-N.C., and digital assets subcommittee head French Hill, R-Ark., have expressed rare praise for the SEC, stating that the approval marks a significant improvement and provides greater access to this generational technology.

The approval of bitcoin ETFs by the SEC, headed by Chair Gary Gensler, a historic crypto skeptic, was more a result of legal constraints than personal acceptance. Gensler highlighted the decision of the U.S. Court of Appeals for the District of Columbia, which stated that the Commission had failed to adequately explain its reasoning in disapproving previous ETP applications. Despite this, Gensler remains cautious, viewing bitcoin as volatile, speculative, and a potential tool for illicit financial activities.

This event marks a pivotal moment in the ongoing debate over the regulation and integration of cryptocurrencies in the U.S. financial system. It raises critical questions about the balance between innovation and regulation, the role of governmental agencies in overseeing emerging financial products, and the future trajectory of the crypto market.

Senator Lummis Advocates for Clear Crypto Regulations

U.S. Senator Cynthia Lummis (R-WY) has recently reaffirmed her support for the cryptocurrency industry, underscoring that the primary issue lies with bad actors, not the assets themselves. This stance was highlighted during a heated exchange with Senator Elizabeth Warren over the financial implications of cryptocurrencies compared to traditional fiat currencies. She stated,

$900 million in non-crypto (fiat currency) money laundering vs $900,000 in crypto money laundering. Crypto is clearly not the problem. Criminals and bad actors are. It would be a historic mistake to crush an entire emerging industry based on incorrect data.

Senator Lummis, a known advocate for the crypto sector, emphasized the necessity of distinguishing between the innovative potential of crypto assets and the illicit activities conducted by some within the space. In a recent Senate Committee on Banking, Housing, and Urban Affairs hearing, she passionately argued for the establishment of a robust regulatory framework, criticizing the prevailing “status quo” that leaves businesses with unclear rules and consumers vulnerable.

The Lummis-Gillibrand Responsible Financial Innovation Act, reintroduced by Senator Lummis, aims to provide a comprehensive regulatory perimeter for crypto assets. This legislation focuses on combating the use of cryptocurrencies in illegal activities, introducing new penalties for violations, and safeguarding against the misuse of crypto for illicit purposes.

In her statement, Senator Lummis highlighted a significant disparity in money laundering activities, citing that traditional fiat currencies have been used to launder over $900 million, far exceeding the $900,000 linked to cryptocurrencies. This comparison was drawn to argue against overly stringent regulations that might stifle the growth of an emerging industry based on misinformed perceptions.

The debate on Capitol Hill, particularly between Senators Lummis and Warren, sheds light on the differing views regarding cryptocurrencies’ role in money laundering. Senator Warren, citing a case involving the Sinaloa Cartel, called for stricter cryptocurrency regulations. In contrast, Senator Lummis pointed out that the same cartel had previously laundered a substantial amount through fiat currencies, indicating that the issue is not with the crypto assets but with the criminals exploiting any financial system.

Senator Lummis’ efforts in advocating for a clear regulatory framework have garnered support from industry experts who agree that effective regulations are crucial for preventing exploitation of the system by bad actors. These regulations would also provide stability and certainty for investors and businesses involved in the crypto sector. As the crypto market continues to evolve, the actions and decisions of policymakers like Senator Lummis will play a pivotal role in shaping its future.

In conclusion, Senator Lummis’ defense of the crypto industry against undue criticism and her push for thoughtful, comprehensive regulations highlight the importance of balancing innovation with security. Her efforts aim to create a regulatory environment that is conducive to the growth of legitimate crypto enterprises while effectively weeding out unlawful activities.