Billionaire investor Mike Novogratz has criticized Senator Elizabeth Warren’s anti-crypto stance, saying decentralized finance, or DeFi, can be a progressive force that is more transparent for consumers than banks.
Warren on Tuesday sent a letter to Treasury Secretary Janet Yellen calling for tougher rules on cryptocurrencies and related industries. The senator is concerned that retail investors are getting hurt in a volatile and unregulated market.
But Novogratz tweeted to Warren on Tuesday night: “You really don’t seem so progressive to me.”
The famed crypto investor said: “Banks charged $12 billion in overdraft fees, a fortune in ATM fees, a fortune in checking account fees. But you keep going after crypto where saving and money transfer is a fraction of banks.”
He added: “If banks had the transparency of DeFi protocols, we would not have had the mortgage crisis. DeFi will win because it’s better. [Automatic] settlement. Bearer assets. Composability. Transparency.
“We just need to solve for KYC [know-your-customer protections] which is coming. We need to educate our politicians.”
DeFi is a catch-all term for financial products built using blockchain technology that do not require a central authority, such as interest-bearing accounts and exchanges that do not need banks, or clearing houses.
Estimates of the size of the market vary, but CoinGecko reckons the market capitalization of the top 100 coins used in the DeFi world is more than $80 billion.
Warren included DeFi on her list of “growing threats” that crypto poses to consumers. She is among the lawmakers and regulators concerned that DeFi’s lack of centralized authorities mean amateur investors have next to no protections and could get badly burned.
The senator said to Yellen that the Financial Stability Oversight Council must “act quickly to use its statutory authority to address cryptocurrencies’ risks and regulate the market to ensure the safety and stability of consumers and our financial system.”