US Senator Sherrod Brown Warns Stablecoin Investors During Hearing

"The only people to walk away unscathed are the big guys...If you put your money in Stablecoin, there's no guarantee you're going to get it back."

Sherrod Brown Warns Stablecoin Investors

Brown wrote to stablecoin producers and cryptocurrency exchanges, expressing his reservations about the new asset class and requesting how stablecoins could be redeemed for fiat currency. Stablecoins, according to Brown, are neither decentralized nor transparent. According to the legislator, critical information concerning cryptocurrencies is not available to customers. Tether was hit with yet another class-action lawsuit earlier this week, accusing it of misrepresenting essential facts about its flagship USDT stablecoin.

Digital tokens are a "wild financial speculation," according to him, and the blockchain technology that underpins stablecoins will never "democratize money" or "create a more inclusive economy."

Stablecoins - Shadiest Parts of the Crypto World

Senator Elizabeth Warren (D-MA), a vocal anti-crypto critic, also raised concerns about the role of stablecoins in decentralized finance, stating that authorities should take stablecoin dangers seriously.

Warren (D-MA) echoed the Ohio senator's concerns, saying that stablecoins are "propping up one of the shadiest sections of the crypto world, decentralized finance (DeFi), where consumers are least protected from being conned." She encouraged the country's regulators to crack down on digital tokens. Senator Patrick Toomey (R-PA) went on to say that new laws around stablecoins should be enacted to address consumer protection and financial sector threats. According to the senator, legislation should be tailored to support innovation in the global digital economy.

Senator Toomey reaffirmed some of the advantages of stablecoins, including faster payment speeds, cheaper transaction costs, more comprehensive access to the payment system, and programmability.