“And when they go down, they take a lot of honest investors down with them,” added Warren (D-Mass.) during her comments Wednesday at an event hosted by the American Economic Liberties Project and Americans for Financial Reform.
FTX’s collapse in November sparked contagion that is still spreading to crypto markets, which remain largely unregulated and opaque.
Warren on Wednesday urged regulators, including the Securities and Exchange Commission and banking regulators, to double down on the tools they already have. They must protect consumers, educate investors and pursue “meaningful consequences” for bad actors, she said.
“Crypto fraud is a big problem, but one we can fix,” Warren said.
The SEC has made “a good start” over the past two years by keeping crypto volatility out of the traditional banking system and preventing bitcoin exchange-traded funds from entering the market, she said. And without naming Bankman-Fried directly, Warren credited the SEC for accusing “crypto crooks” of defrauding ordinary investors.
But the SEC can’t fix everything.
“All of our regulators have to come into play,” Warren said, urging environmental and banking officials to get involved.
“Crypto mining companies are polluting communities, taxing power grids and driving up operational costs in communities from Texas to New York,” she said. “Both the Department of Energy and the Environmental Protection Agency have the authority to require crypto miners to disclose their energy use and environmental impact.”
Warren said the rise of crypto-friendly banks has already put the traditional banking system at greater risk and “raised the specter of a crypto meltdown, with American taxpayers holding the bag.”
“It is the job of banking regulators to protect the banking system – and taxpayers – from the risk of crypto fraud. You have the tools and you have to use them.
Finally, Warren said, it is Congress’s responsibility to give agencies the tools they need to enforce the rules when regulators lack the requisite authority.
In her typical matter-of-fact tone, she paid tribute to crypto advocates who have long resisted the idea of more regulation.
Tougher regulators, she said, would give the industry a chance “to prove it can deliver on its innovation promises without robbing investors or laundering funds for drug traffickers and terrorists.”
“No financial industry should be allowed to write its own playbook – either obey the law or face harsh consequences if you break it. Crypto is no different.”