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Senator Warren Urges Action While BlockFi Granted Extension – Regulation Weekly





For digital assets to thrive, they need to operate within the boundaries of current and future regulations – not skirt around them.  This past week various developments were seen, shedding light on the mindset of regulators, along with enforcement actions being taken.


Stablecoins, such as market leading Tether, are pivotal to the success of digital assets.  Whether it be cryptocurrencies, digital securities or some other niche sector, stablecoins play an important role in providing investors a widely accepted and non-volatile means of settlement and exchange.  This role underscores the importance of trust within Tether – something that may be wavering once again reports indicate a new probe in to the company is being undertaken by the United Stated Department of Justice (USDOJ).

The allegations, which center around Tether executives, suspect that bank fraud was committed.  This was done as undisclosed accounts were opened abroad in an attempt to obfuscate the relationship of various transactions to digital assets.

As alluded, this is not the first time that Tether has come under attack by a regulatory or enforcement body.  In fact, Tether itself views these most recent developments as trivial click-bait, as they are founded on already resolved events.  Tether responded to development, stating,

“Today, Bloomberg published an article based on unnamed sources and years-old allegations, patently designed to generate clicks. This article follows a pattern of repackaging stale claims as “news.” The continued efforts to discredit Tether will not change our determination to remain leaders in the community.

Tether routinely has open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability. We are proud of our role as industry leaders in promoting cooperation between industry and government authorities in the U.S. and around the world. We remain committed to our customers and the industry-leading technology and transparency that has led to our growth. 

It is business as usual at Tether, and we remain focused on how to best serve the needs of our customers.”

Warren + Yellen

While the USDOJ may have its hands full with Tether, Secretary of the Treasury, Janet Yellen, is being called upon to ‘reign in cryptocurrency’ by Senator Elizabeth Warren.

“I have become increasingly concerned about the dangers cryptocurrencies post to investors, consumers, and the environment in the absence of sufficient regulation in the United States.  However, as the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system, the Council must determine whether these trends raise concerns beyond investor and consumer protection and extend to broader systemic vulnerabilties that could threaten financial stability.”

The above excerpt is from a recent letter written by Senator Warren.  In it, the Senator also highlights various areas of risk posed by digital assets, and a need for coordination between the Financial Stability Oversight Council (FSOC) and other regulatory bodies to ensure the soundness of the financial system.  The following are those areas of risk identified by Senator Warren.

  • Exposure to Hedge Funds and Other Investment Vehicles that Lack Transparency
  • Risk to Banks
  • Unique Threats Posed by Stablecoins
  • Use in Cyberattacks that Can Disrupt the Financial System
  • Risks from “Decentralized Finance” (DeFi)

This pressure being placed on Janet Yellen by Senator Warren is simply the latest example of the her strong stance against digital assets.  Weeks ago, the Senator criticized the Securities and Exchange Commission (SEC), as she felt that it’s, “lack of common-sense regulations has left ordinary investors at the mercy of manipulators and fraudsters”.  Building on this sentiment, Senator Warren continued, stating, “The SEC must use its full authority to address these risks, and Congress must also step up to close these regulatory gaps.”


Securities violations can be a serious and costly mistake – just ask Robinhood.  The latest company to find itself under a regulatory microscope is none other than BlockFi.

As the recipients of a recent cease and desist order, issued by the New Jersey Bureau of Securties, BlockFi is being accused of “funding its cryptocurrency lending operations and proprietary trading at least in part through the sale of unregistered securities in violation of the Securities Law”.

These events have prompted BlockFi CEO, Zac Prince, to reach out and update its client-base on the developments surrounding its cease & desist order.

“We’ve said time and again that the key to our industry’s success is appropriate regulation. Ultimately, we see this as an opportunity for BlockFi to help define the regulatory environment for our ecosystem…We have been engaged in a productive discourse with regulators to protect your interests and expand accessibility to innovative financial solutions for all.”

As one of the most well-funded companies involved with digital assets, all eyes – investors and platform users alike – will be on this situation, as its end result will directly impact not only BlockFi, but no doubt its various competitors as well.  For the time being, the New Jersey Bureau of Securities has granted BlockFi an extension on its timeline to September 2nd, for shutting down certain services.