US Senator Says Defi Is the Most Dangerous Part of Crypto – Urges Regulators to Clamp Down Before It's Too Late.

16 Dec 2021, 08:00

US Senator Says Defi Is the Most Dangerous Part of Crypto – Urges Regulators to Clamp Down Before It’s Too Late U.S. Senator Elizabeth Warren has called on regulators to clamp down on decentralized finance (defi) and stablecoins “before it’s too late.” She said: “Defi is the most dangerous part of the crypto world … it’s where the scammers, the cheats, and the swindlers mix among the part-time investors and first-time crypto traders.” US Senator Urges Regulators to Clamp Down on Defi and StablecoinsDuring a hearing of the Senate Banking, Housing, and Urban Affairs Committee Wednesday, U.S. Senator Elizabeth Warren (D-Mass.) called on regulators to “clamp down” on stablecoins and decentralized finance (defi) platforms “before it is too late.”She brought up stablecoins tether (USDT) and usd coin (USDC). In response to Senator Warren, Alexis Goldstein, director of financial policy at Open Markets Institute, explained that stablecoins “may not always be backed one-to-one … as the assets backing those tokens are often not real dollars.”Warren pointed out that based on Tether’s own report, “only about 10% of the assets backing its stablecoin are real dollars in the bank. 90% is something else — not real dollars.” In addition, she stressed that the report “is not actually verified by a comprehensive audited financial statement or verified by any government regulator.”While noting that “stablecoins are not always stable,” Warren described: “It’s worse than that. In troubled economic times people are most likely to cash out of risky financial products and move into real dollars. Stablecoins will take a nosedive precisely when people most need stability, and that run-on-the-bank mentality could ultimately crash our whole economy.” The senator detailed: Defi is the most dangerous part of the crypto world. This is where the regulation is effectively absent and — no surprise — it’s where the scammers, the cheats and the swindlers mix among the part-time investors and first-time cryptotraders. Shoot, in Defi someone can’t even tell if they are dealing with a terrorist.