Potential 2020 Democratic presidential contender Elizabeth Warren took two major swipes at cryptocurrency today.
Crypto is easy to steal and a lot of small investors are being scammed through initial coin offerings, Warren warned in a Senate Banking Committee hearing.
“The challenge is how to nurture productive aspects of crypto with protecting consumers,” the Massachusetts Democratic Senator asserted.
Wariness over crypto also came from Ohio Senator Sherrod Brown who would take over the Banking Committee as chair if Democrats regain control over the Senate in next month’s elections.
Brown expressed concern about families investing their savings in crypto and ICOs.
The Senator said he wants to see crypto and blockchain bring financial services to the unbanked and other benefits to consumers but so far, the real world applications have been few and the number of scams many.
A backhanded defense of crypto came from Pennsylvanian Pat Toomey, in line to head the Committee if Republicans retain their majority in the upper chamber of Congress.
“Central banks over time haven’t had the greatest record of preserving the value of their currencies,” noted Toomey in what likely was an allusion to the plummeting price of crypto in the last year.
The current Banking Committee Chair Idaho Republican Mike Crapo forecasted the landscape of crypto and blockchain looms more favorably for the future than the present.
“Blockchain networks have the potential to improve processes for things like smart contracts, payments and settlement, identity management and even things yet undiscovered,” Crapo predicted.
Now, however he found fault with the cryptocurrency and blockchain ecosystem for price volatility and ills like reports of things like pump-and-dump schemes.
Alabama Democratic Senator Doug Jones told the hearing he has reservations about crypto because in prosecuting criminals as a U.S. Attorney he learned the bad guys were two or three or a lot more steps ahead of law enforcement in technology.
But CoinCenter Research Chief Peter Van Valkenburgh responded law enforcement is phenomenal at identifying a Bitcoin address and connecting it to crimes.
Van Valkenburgh predicted the public would be aided by taking cryptocurrency oversight out of the hands of the states and putting it into the federal government.
“Federal pre-emption of state cryptocurrency regulation would be a wide choice that would make America a world leader and protect consumers, he urged.
Van Valkenburgh argued policymakers should take light touch to blockchain and cryptocurrency much as the Clinton Administration did successfully to the development of the Internet.
He claimed they will be as significant for prosperity as the birth of the Web.
Van Valkenburgh’s rosy outlook for the new technologies was attacked by NYU Economist Nouriel Roubini who was invited to testify at the hearing as a counterpoint.
The economist lambasted crypto for massive and fundamental flaws in security.
He said the flows include the highly concentration of crypto mining in shady and nontransparent and unsecured jurisdictions such as China, Russia, Belarus,and Georgia.
While the expert acknowledged Bitcoin has not been hacked, Roubini cautioned centralized exchanges holding cryptocurrencies of millions of depositors have been and can be hacked on a regular scale.
He lauded traditional currencies over crypto in part because a depositor or credit card holder with a normal currency is made whole with little effort when someone tries to steal their money or make a fraudulent charge on their credit card.