Senator Warren Urges Action While BlockFi Granted Extension – Regulation Weekly

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Senator Warren Urges Action While BlockFi Granted Extension – Regulation Weekly

 

To flourish, digital assets must work inside the confines of existing and future laws, rather than skirting around them. Various events during the last week have been observed, providing insight on regulators’ mindsets as well as enforcement measures performed.

Tether

Stablecoins, such as Tether, which is the market leader, are critical to the development of digital assets. Stablecoins play a vital role in providing investors with a generally recognized and non-volatile method of settlement and trade, whether it’s for cryptocurrencies, digital securities, or some other specialized industry. This position emphasizes the significance of trust inside Tether, which may be eroding once again, according to rumors that the US Department of Justice is conducting a fresh investigation into the firm (USDOJ).

Bank fraud is suspected in the accusations, which revolve several Tether executives. This was done in an effort to obscure the connection between different transactions and digital assets by opening hidden accounts overseas.

As previously stated, this isn’t the first time Tether has been targeted by a regulatory or enforcement agency. In reality, Tether considers the most recent developments to be clickbait since they are based on already settled events. Tether reacted to the news by saying,

“Today, Bloomberg released a story based on anonymous sources and years-old accusations that was clearly intended to get people to click. This post is part of a trend of repackaging old assertions as “news.” Our resolve to be leaders in the community will not be swayed by the ongoing attempts to undermine Tether.

Tether routinely has open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability. We are proud of our role as industry leaders in promoting cooperation between industry and government authorities in the U.S. and around the world. We remain committed to our customers and the industry-leading technology and transparency that has led to our growth. 

It’s business as usual at Tether, and we’re continuing to concentrate on how to best service our customers’ needs.”

Warren and Yellen are a powerful combination.

While the USDOJ may be preoccupied with Tether, Senator Elizabeth Warren has asked Secretary of the Treasury Janet Yellen to ‘reign in cryptocurrencies.’

“In the absence of adequate regulation in the United States, I have grown more worried about the risks that cryptocurrencies pose to investors, consumers, and the environment. However, as the demand for cryptocurrencies grows and these assets become more integrated into our financial system, the Council must consider whether these trends raise concerns that go beyond investor and consumer protection and include broader systemic vulnerabilities that could jeopardize financial stability.”

Senator Warren wrote the following passage in a recent letter. The Senator also discusses the different risks presented by digital assets, as well as the necessity for cooperation between the Financial Stability Oversight Council (FSOC) and other regulatory organizations to maintain the financial system’s soundness. Senator Warren has highlighted the following areas of danger.

  • Exposure to Hedge Funds and Other Non-Transparent Investment Vehicles
  • Banks are at risk.
  • Stablecoins Pose Unique Threats
  • Use in Cyberattacks that Have the Potential to Destabilize the Financial System
  • The Dangers of “Decentralized Finance” (DeFi)

Senator Warren’s insistence on Janet Yellen is only the most recent evidence of her adamant opposition to digital assets. Senator Elizabeth Warren attacked the Securities and Exchange Commission (SEC) a few weeks ago, claiming that the agency’s “lack of common-sense rules has put regular investors at the whim of manipulators and fraudsters.” Senator Warren went on to say, “The SEC must utilize its full power to address these dangers, and Congress must also step up to fix these regulatory loopholes,” echoing similar view.

BlockFi

Just ask Robinhood how severe and expensive securities breaches can be. BlockFi is the most recent firm to be scrutinized by the regulatory authorities.

BlockFi has been accused of “financing its cryptocurrency loan activities and proprietary trading at least in part via the sale of unregistered securities in violation of the Securities Law,” according to a recent stop and desist order issued by the New Jersey Bureau of Securities.

These events have prompted BlockFi CEO, Zac Prince, to reach out and update its client-base on the developments surrounding its cease & desist order.

“We’ve said it before and we’ll say it again: proper regulation is the key to our industry’s success. Finally, we view this as a chance for BlockFi to assist define our ecosystem’s regulatory framework… We’ve been having a fruitful conversation with regulators to safeguard your interests and provide access to new financial solutions for everyone.”

As one of the most well-funded digital asset businesses, all eyes – investors and platform users alike – will be on this issue, as the outcome will have a direct effect on not just BlockFi, but also its numerous rivals. For the time being, the New Jersey Bureau of Securities has extended BlockFi’s deadline for shutting down some services until September 2nd.

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Emilia James
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