“DeFi is the most dangerous part of the crypto world,” Senator Elizabeth Warren said

Senator Elizabeth Warren of Massachusetts has not flinched from the criticism of decentralized finance (DeFi). She expressed concern about how stablecoin runs will affect ordinary investors.

In a hearing on stablecoins with the Senate Banking Committee on Tuesday, Warren be questioned Hillary Allen, a professor at the American University Washington School of Law, asked whether the operation of stablecoins might endanger the American financial system. Although Allen stated that the current “massive” redemption of stablecoins from people who have lost faith in tokens is unlikely to have “systemic consequences” for traditional markets, the DeFi system is more likely to feel this impact.

Warren countered that because stablecoins provide the “lifeblood of the DeFi ecosystem” outside of the regulated market, she believes that their value will “pump when people need stability the most”, thus affecting traditional finance.

“DeFi is the most dangerous part of the crypto world,” Warren said. “This is a place where regulation actually doesn’t exist, and—not surprisingly—this is a place where scammers, scammers, and scammers mix between part-time investors and first-time cryptocurrency traders. In DeFi, some people can’t even judge. Are they dealing with terrorists.”

Allen added that Warren’s potential threat may lie in the future of DeFi, but did not address her claims about illegal transactions:

“I think DeFi cannot grow without stablecoins. I think it will struggle. Currently, I think DeFi has been contained to the extent that it will not affect financial stability, but if it grows, I think there is a real threat there, especially If it is intertwined with our traditional financial system.”

The discussion among US lawmakers present at the hearing was titled “Stablecoins: How do they work, how are they used, and what are their risks?” — Follow Committee Chairman Sherrod Brown Require crypto companies to release information Related to the protection of consumers and investors of stablecoins. Allen appeared as a witness with Alexis Goldstein, head of public market financial policy; Jai Massari, partner at Davis Polk & Wardwell; Dante Disparte, Circle’s chief strategy officer and head of global policy.

related: Regulators come for stablecoins, but where should they start?

Warren has previously claimed through hearings and public statements that cryptocurrencies are mainly related to illegal activities.At the June hearing Discuss central bank digital currencyThe Massachusetts senator stated that “the crypto world currently has no consumer protection” and referred to many tokens as “false” investments.She also has Criticizing the high transaction fees of the Ethereum network During price fluctuations.