Cryptocurrency And US Economy:
The online crypto community took notice of Elizabeth Warren’s WSJ opinion piece in which she linked the failure of the FTX cryptocurrency exchange to cryptocurrency wrecking the entire economy.
Since the situation started to fall apart days before it filed for bankruptcy on November 11, the collapse of former crypto exchange FTX has left the entire sector in shambles. United States Senator Elizabeth Warren recently expressed her disapproval of the industry in an opinion piece.
According to Warren, the cryptocurrency market follows a “well-travelled route of financial innovation,” which begins with exhilarating gains but ends with “crippling losses.” She compared it with 2008’s subprime mortgages, penny stocks, and credit-default swaps.
According to the senator, the events surrounding FTX should serve as a “wake-up call” for authorities to impose restrictions on the sector.
FTX’s collapse should be a wake-up call. @SECGov,@TheJusticeDept & @USTreasury should use their expansive authority to crack down hard on crypto fraud. Congress must close loopholes & back up these financial cops on the beat with more resources.
My oped: https://t.co/ARdtun2pAb
— Elizabeth Warren (@SenWarren) November 22, 2022
Some people on Twitter agreed with the senator, stating that the cryptocurrency industry is nothing more than “smoke and mirrors” and that Warren has been attempting to alert the public for the entire time. Although many have blamed her, claiming that authorities don’t comprehend the industry and sow panic with such remarks.
Regarding centralised exchanges, which are very different from the technology of crypto and decentralised exchanges, one user suggested a medium ground, arguing that there is a place for regulation.
Changpeng “CZ” Zhao backfired:
The co-founder and CEO of Binance, Changpeng “CZ” Zhao, tweeted on the subject the next day without particularly mentioning the op-ed and stated that there is always failure where there is development.
Some (including me) say this will "set the industry back a few years." But thinking about it, this is natural. There will be failures with progress. Happened in regulated TradFi in 2008, after 70+ years of development. The industry will recover quickly, and become stronger.
— CZ 🔶 Binance (@cz_binance) November 23, 2022
Many community members stated that this is the reset crypto needed in reaction to CZ’s tweet.
Following the FTX affair, American regulators have been vocal in their concerns. U.S. senators sent a letter to Fidelity on November 21 requesting that the company reevaluate its Bitcoin products in light of FTX.
On November 16, Warren and Senator Richard Durbin made public a letter they had sent to Sam Bankman-Fried and John Jay Ray III, the former and present CEOs of FTX. 13 requests for documents, lists, and information about the situation were included in the letter.
Over the past year, Warren has been a vocal opponent of the cryptocurrency sector. She has previously referred to DeFi as “hazardous” and has been involved in exposing unethical behaviour in the American crypto-mining industry.
These issues are covered in her most recent opinion piece, along with how cryptocurrency is used in ransomware attacks and money laundering.
Conclusion:
Cryptocurrency is topsy turvy land with many pros and cons.
