On Tuesday, Gary Gensler, chairman of the Securities and Exchange Commission, spoke before the Senate Banking Committee. The cryptocurrency was a hot topic, and he foreshadowed it with a sarcastic "And now for the crypto" in his opening comments.
Senator Elizabeth Warren: The SEC should oversee cryptocurrency exchanges in light of this week's crypto price drop and subsequent crypto exchange failures.
Senator Warren questioned crypto's claims to financial inclusivity in one especially pointed discussion.
“We hear a lot about how crypto is all about financial inclusion,” she says. “I want to see if crypto is a better alternative to the banking system with you.”
About last week's crisis, Warren stated, "In a couple of hours, $400 billion in market value suddenly vanished."
She used the example of a hypothetical retail investor who lost all of his money after investing on Monday night.
If that investor needed to withdraw funds, he or she would discover that crypto exchanges such as Coinbase were momentarily unavailable.
Warren and Gensler agreed that that investor would have no recourse since there is no federal regulatory framework for cryptocurrency exchanges.
They especially targeted Coinbase, with Gensler complaining that they did not have to register as a securities exchange "despite having hundreds of tokens that may be securities."
Then, pointing to "DeFi exchanges," she stated that "the cost to trade between two tokens on the Ethereum network last Tuesday was more than $500."
Gensler has been focusing on the Securities and Exchange Commission's requirement that bitcoin exchanges be registered.
Meanwhile, Coinbase has already reported a significant disagreement with the SEC over its Lend platform, which the SEC has threatened to sue as another type of unregulated security.