Senator Elizabeth Warren’s Cryptocurrency Crash: Risks for America

  • Instead of taking a shotgun approach, focus on finding solutions to the risks associated with cryptocurrency.

In light of the FTX debacle, Senator Elizabeth Warren recently introduced a bill that would require the US Treasury Secretary to establish a rule prohibiting financial institutions from operating self-hosted wallets. Innovation in the United States is at risk because of Warren’s approach to regulation.

Fortunately, some legislators in the United States are aware of both cryptography and the principles of freedom upon which the state is founded. As Rep. Warren Davidson (R-OH) puts it, “to own and hold private property,” he knew it was only a matter of time before someone like Warren tried to force the Treasury Department to interfere with customers’ right to self-custody their digital property. To protect Americans’ right to privacy while dealing with crypto holdings, he proposed the “Keep Your Coins Act” last February.

The bill prohibits any federal agency from enacting a rule that would limit someone’s ability to act as a sole trader and consequently their ability to conduct peer-to-peer transactions without requiring a third-party intermediary such as FTX.

Davidson said after introducing the bill. “The federal government intends to impose greater oversight on American citizens as it seeks to further regulate the crypto environment.”

The collapse of FTX makes it very clear why you need to protect your own custody. By portraying FTX as a sizable financial institution with rich sponsorships and spokespeople, Sam Bankman-Fried convinced consumers to trust the company with their digital assets. Satoshi Nakamoto, the creator of Bitcoin, believed that blockchains were unreliable. FTX clients who moved their digital assets from FTX to their own wallets suffered no financial losses as a result of Bankman’s fraud.

Elizabeth Warren has argued that the government should eventually ban people from holding Bitcoin in their retirement accounts as a further acceptable response to the FTX collapse.

Warren and her two fellow Democrats in the Senate, Dick Durbin and Tina Smith, called for a ban on consumers being able to set aside bitcoins for their retirement plans in a letter to Fidelity Investments.

Fidelity is not forcing anyone to invest retirement funds in bitcoin which recently allowed consumers to pay part of their contributions in Bitcoin. Instead, it only gives consumers the option to include exposure to bitcoin with their stocks, bonds, precious metals, index funds, emerging markets and other risky and volatile investments.

Warren was seen as a champion of the people fighting the banking industry, the Wells Fargos, Chases and HSBCs of the world during the 2008 global financial crisis.

In a letter to Warren, Kadan Stadelmann said that “Your open hostility to financial freedom violates American ideals and deprives consumers of their rights, leaving them helpless against the financial fraudsters you claim to be fighting.”

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