In a recent Senate Committee hearing, Democratic Senator Elizabeth Warren stated her concerns over high fees on the Ethereum network.
Senator Warren has a reputation as an outspoken critic of cryptocurrency. Now she turns her attention to the high prices of Ethereum network transactions. The comments came during a committee hearing on Tuesday. The meeting discussed housing, banking, and urban affairs with Securities and Exchange Commission chair Gary Gensler.
During the hearing, Warren said “high, unpredictable fees can make crypto trading really dangerous for people who aren’t rich.” Warren specifically highlighted large fees during times of high market volatility. “$400 billion in market value just disappeared,” she in reference to recent price drops among Bitcoin and Ethereum.
She said as volatility increases, exchanges like Coinbase experience service outages at a time that might benefit them the most.
High Fees and Budget Investors
Senator Warren pointed out a specific example from September 7 2021.
On this day, the price of bitcoin took a dive from around $52,000 to less than $43,000. She called it problematic how fees at that time, eclipsed $500 for token swaps. “In the face of these high, unpredictable fees, small investors could easily get jammed and wiped out entirely,” Warren said.
She added that many who advocate for cryptocurrency will simply say that the market is all about financial inclusion. However, Warren highlighted the perils for economically at-risk investors. “The people who are most economically vulnerable are the ones who are most likely to have to withdraw their money the fastest when the market drops,” Warren explained.
The Senator shared an anecdote from a Coinbase user. Reportedly the user used the last of his savings for an Ethereum purchase. However a service outage prevented him from selling. To this, Gensler said as it now stands there is no possibility for federal intervention in such a situation. “Not at a federal agency because they haven’t yet registered with us even though they have dozens of tokens that may be securities.”
Nonetheless, over regulation of the industry poses its own problems. It limits the decentralization and autonomy inherent to the industry. As it stands the industry remains on edge while U.S. regulators finalize their crypto tax provisions. Officials pledged for a passed bill by the end of September.
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