Senator Calls Cryptocurrency A New Shadow Bank

Senator Elizabeth Warren Expresses Concerns About Crypto Startup Lending Products That Do Not Guarantee Users Protection And Stability.

Massachusetts Senator Elizabeth Warren, who vied with Joe Biden for the right to become the US presidential candidate from the Democratic Party, in an interview with The New York Times explained why she considers cryptocurrency to be the new shadow bank.

According to Warren, digital services offer credit products to users without guaranteeing them protection and stability. Whereas the traditional financial system is based on the fulfillment of precisely these conditions, the senator added.

Warren recalled the study of the activities of the crypto-lending platform BlockFi, which is being carried out by regulators of several American states.

BlockFi savings accounts are unregistered securities, according to regulatory claims . According to Warren, startups similar to BlockFi are turning into full-fledged shadow bank.

An update on regulatory conversations: pic.twitter.com/0TYqSfBk4i

— BlockFi (@BlockFi) July 28, 2021

At the end of July this year, the senator already announced that cryptocurrencies pose a threat to the traditional financial system.

Warren argued that it is necessary to research the positive and negative aspects of digital assets in order to understand how they might affect the traditional financial system.