Welcome to the latest edition of Cointelegraph’s decentralized finance newsletter.
As the market attempted to recover from last week’s pummeling, decentralized finance (DeFi) was once again the topic of discussion in high-profile U.S. governmental offices. Read on to learn more about this news and much more from the world of decentralized finance.
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Senator Warren warns about supposed DeFi dangers
Senator Elizabeth Warren publicly scrutinized the decentralized finance sector this week in a hearing with the Senate Banking Committee.
Speaking on the topic of “Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks,” Warren conversed with Alexis Goldstein, a regulatory expert on financial matters, on the intricacies of stablecoin transactions, including Tether (USDT) and USD Coin (USDC) and whether the former has genuine one-to-one dollar backing.
Following this, the former Democratic presidential candidate questioned Hilary Allen, a professor at the American University Washington College of Law, on whether a run on stablecoins could potentially endanger the country’s financial system.
In response, Allen argued that stablecoins runs, in which speculators of the asset sell on mass, would be akin to that witnessed in money market mutual funds and foreign exchange markets and, therefore, could have wide-ranging consequences for the DeFi ecosystem.
In closing, Warren stated, “DeFi is the most dangerous part of the crypto world,” adding:
“I don’t think DeFi can grow without stablecoins. I think it would struggle. Right now, I think DeFi is contained to the point where it won’t impact financial stability, but if it grows, I think there’s a real threat there, particularly if it becomes intertwined with our traditional financial system.”
Warren’s track record in commenting on the cryptocurrency space follows a consistently predictable pattern that largely insinuates illicit activity within the market, alongside advocacy for robust consumer security in light of sparse regulation.
In June this year, she spoke dramatically about the emergence of central bank digital currencies (CBDC), stating that cryptocurrencies have “created opportunities to scam investors, assist criminals and worsen the climate crisis” and that a positive solution could be a centralized, federally-backed U.S. digital dollar.
Around the same time as the hearing, Warren became embroiled in an argument with tech titan Elon Musk, accusing the maverick CEO of “freeloading” off the general public after reports emerged about tax contributions among the country’s top earners. Verbal insults were exchanged back and forth between the pair on various mediums, including Twitter.
Please don’t call the manager on me, Senator Karen
— Elon Musk (@elonmusk) December 14,…
Read More: cointelegraph.com