US Senator Calls Cryptocurrency New Shadow Bank

Senator Elizabeth Warren has expressed concerns about crypto startup lending products that are notguarantee users protection and stability.

Massachusetts Senator Elizabeth Warrenwho competed 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 a 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 activitiescrypto-lending platform BlockFi, which is handled by regulators of several US states. BlockFi's savings accounts are unregistered securities, according to regulatory claims. According to Warren, startups similar to BlockFi are turning into full-fledged shadow banks.

At the end of July this year, the senator already announcedthat cryptocurrencies pose a threat to the traditional financial system. Warren argued that it is necessary to research the pros and cons of digital assets in order to understand how they might affect the traditional financial system.

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