By Andrea Shalal

WASHINGTON (Reuters) – U.S. Senator Elizabeth Warren on Thursday warned of the growing challenges posed to individuals and financial markets by the “very opaque and unstable” cryptocurrency industry and blasted its lack of regulation as unsustainable.

Warren, a Democrat who chairs the Senate Banking Committee’s Subcommittee on Economic Plan, also lifted her issues in a letter to Securities and Trade Commission (SEC) Chair Gary Gensler on Wednesday, in an work that could enable lay the groundwork for legislation to regulate the rapidly-rising sector.

The previous presidential applicant stated she wanted answers from Gensler by July 28 on the SEC’s authority to protect shoppers investing and investing in cryptocurrencies, and decide what potential congressional action was needed.

Cryptocurrencies reached a file capitalization of $2 trillion in April, but U.S. oversight of the market place stays patchy.

“Whilst desire for cryptocurrencies and the use of cryptocurrency exchanges have sky-rocketed, the absence of prevalent-feeling restrictions has left standard traders at the mercy of manipulators and fraudsters,” Warren reported in a statement.

“These regulatory gaps endanger individuals and traders and undermine the protection of our money marketplaces. The SEC must use its comprehensive authority to tackle these pitfalls, and Congress will have to also action up to close these regulatory gaps.”

Spokespeople for the SEC and Gensler did not instantly react to a request for comment on Wednesday evening.

Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen have warned that cryptocurrencies pose risks to fiscal steadiness and suggested better regulation may well be warranted.

Officials from the Group of 20 important economies are also envisioned to talk about the difficulty when they meet up with in Venice this weekend.

Gensler, who turned SEC chair in April, has mentioned in the past that cryptocurrencies ought to be incorporated into the economic regulatory system, but has still to propose new regulations.

In her letter to Gensler, reviewed by Reuters, Warren mentioned cryptocurrency platforms lacked the identical standard protections as conventional exchanges and observed that just about 7,000 people described a put together $80 million in losses from cryptocurrency ripoffs in the six months to March 2021.

Need for cryptocurrencies has surged over the past year with Coinbase, the greatest cryptocurrency exchange in the United States, reporting 2021 first quarter investing quantity of $335 billion, a tenfold boost on the same period a yr back.

Warren questioned Gensler to define the approaches in which cryptocurrency exchanges may well be undermining the SEC’s mission to be certain that marketplaces are working in a “truthful, orderly, and efficient way,” whether extra protections were being required for traders, and no matter whether international regulatory coordination was expected.

“The absence of regulation to provide essential trader protections is unsustainable,” she added.

(Reporting by Andrea Shalal supplemental reporting by Chris Prentice enhancing by Michelle Cost and Richard Pullin)