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US Senator urges regulation for cryptocurrency

written by Bella Palmer
cryptocurrency

Cryptocurrencies are volatile by nature, with enormous swings in valuation based on some unrelated market stimulus

US Senator Elizabeth Warren likened cryptocurrency trading to the "Wild West" and argued that regulation for often volatile currency market was necessary.

Ms Warren made the comments on Wednesday to Bloomberg TV following a meeting of the Senate Banking Committee to discuss digital currencies.

We had a chance to talk with experts, bring in a lot of senators around it, but the bottom line was that what's happening right now in cryptocurrency like Bitcoin and Dogecoin, it's a Wild West out there, and it makes it not a good way to buy and sell things, and not a good investment, and an environmental disaster, she said. So do we need some regulation around this? You bet we do.

Cryptocurrencies like Bitcoin and Dogecoin are volatile by nature, with enormous swings in valuation based on some seemingly unrelated market stimulus not at all uncommon.

When Tesla CEO Elon Musk appeared on Saturday Night Live last month, he had already been pumping up Dogecoin for weeks. The meme-coin saw explosive growth as Mr Musk's faithful hung on his words and purchased the cryptocurrency.

Then, during his SNL appearance, Mr Musk and his mother joked about the coin, calling it a hustle. Just Mr Musk's slightly negative mention of the coin send investors scrambling to sell.

Dogecoin fell 40 per cent as a result, but only after it gained 12,000 per cent from the start of the year.

Bitcoin took a similar hit in popularity – also caused in part by Mr Musk – when the Tesla CEO stopped accepting Bitcoin as payment for his electric vehicles.

Mr Musk turned away the digital cash over concerns that Bitcoin, specifically its mining, is bad for the environment, a sentiment shared by Ms Warren and many other critics of the digital currencies.

According to the Cambridge Bitcoin Electricity Consumption Index, the coin uses more power than all of Sweden and Malaysia.

In addition to its environmental impacts, due to the intentionally anonymous nature of Bitcoin transactions, it has become the currency of choice for criminals.

Ms Warren said cryptocurrency has created opportunities to scam investors, assist criminals, and worsen the climate crisis.

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