Massachusetts Senator Elizabeth Warren put crypto in the spotlight during a CBDCs senate hearing, warning regulators about the need to stop hiding out when it comes to digital currencies.
The Democrat senator called on fellow policymakers to focus on the problems that cryptocurrency has created for the national economy as it failed to provide millions of Americans with the benefits it supposedly would provide.
While supporting the proposition of creating a digital dollar as a means to boost the economy, she referred to crypto by stating:
“Cryptocurrency has created opportunities to scam investors, assist criminals, and worsen the climate crisis. The threats posed by crypto show that Congress and federal regulators can’t continue to hide out, hoping that crypto will go away. It won’t. It’s time to confront these issues head-on.”
In an interview with Bloomberg, Warren called the crypto market as the “wild west” while also stating that digital currencies were not a good asset to trade assets or invest. She also added that cryptocurrencies were, “an environmental disaster.”
The Senate Banking Committee Can’t Agree on CBDCs
The Senate Banking Committee hearing took place on Wednesday 9th focused on Central Bank Digital Currencies (CBDCs) and included the input of four key witnesses:
- Dr. Neha Narula from MIT
- Mr. Lev Menand from Columbia Law School, Senior Counsel at Willkie Farr & Gallagher
- Christopher Giancarlo
- Dr. Darrell Duffie of Stanford University Graduate School of Business.
All of the witnesses agree on the idea that a well-built CBDC could prove beneficial to the United States in a variety of ways ranging from providing new ways of storing a value to facilitating and improving the efficiency of transactions.
While Warren and other democrats expressed their support for the Federal Reserve’s plans of issuing a digital dollar, Republican lawmakers were not as enthusiastic with the idea.
Republican Senator Pat Tommey said there was no need for a state-sponsored bank interfering with a free-enterprise system which has proven successful.
With countries like China working on the development of their CBDCs, the United States run the risk of falling behind on what could become the new norm when it comes to a digitalized fiat currency.
The risk of falling behind and increasing concerns around cryptocurrency has been an increasing topic of interest among US regulators and lawmakers, which promises to be one of the most important topics the new administration will need to handle in the near future.
El Salvador Disagrees With US’s Stance
While the United States have taken an increasingly hostile stance toward Bitcoin and other Cryptocurrencies in recent years, countries in Latin America have started to embrace them as a potential legal tender.
Nayib Bukele, the President of El Salvador, recently announced his plans to make Bitcoin a legal tender in the country. His plans came to fruition on June 9th when a majority of the country’s legislature approved the proposal, officially becoming the first country in the world to recognize BTC as a legal tender.
While the US dollar will continue to be El Salvador’s main currency, Bitcoin can now be used in any transaction and all businesses will be required to accept payments in Bitcoin if they don’t lack the technology to do so.
Bukele said the new law would bring financial inclusion, investment, tourism, innovation, and economic development to the Central American nation, as well as open up financial services to more than 70% of citizens who have no access to them.
While El Salvador is the 104th economy by GDP, it could set an example for other Latin American countries to consider using BTC as a legal tender. Countries like Argentina, Paraguay, and Panama have already seen some of their congressmen talk about, “not falling behind,” in terms of financial innovation.