Beware of the “sane” crypto crowd – they are worse than the fanatics
As much fun as it can be to make fun of crypto bros—with their stupid memes, annoying acronyms, childish jokes, and frankly ridiculous ideas about the world—I have to admit: I don’t think they’re the main problem. As far as I’m concerned, it’s the earnest, narrow-minded types who insist that we all take it all terribly seriously who pose the greatest threat to our survival as a rational and prosperous society. Welcome to the plague of what I like to call “sensible crypto”.
What I’m talking about when I use this oxymoron are men in suits – and it’s mostly men, although there are women too – who will tell you that the vast majority of crypto countries are a giant pain, but that their cryptocurrencies are going to change the way we send money around the world, making the financial system fairer and more inclusive and democratic.
It is the political leaders who insist that we must embrace this harmful industry to stay ahead of innovation. It’s the Wall Street types with money to lose who appear on CNBC to tell the less well-off that crypto is a safe place to put their money. And yes, it’s the crypto exchange CEOs who don’t care about Lambos and designer clothes; they just want to make a few billion dollars so they give it all away and make the world a better place.
These people lend credibility to a high-risk, opaque and poorly understood industry that should be considered a cross between a multi-level marketing scheme and a Ponzi scheme, preying on – and indeed relying on – those who can’t afford to gamble theirs. gone.
One way these sensible cryptocurrencies exert influence is via central bank digital currencies. You might think that these CBDCs should have little to do with crypto, given that they would be centrally issued and controlled, and that cryptocurrencies are not used as money, but as a means of speculation. And you would be right. But the argument for CBDCs – that they could allow faster, cheaper and more efficient transfers of money – is also one of the arguments being pushed by crypto, and thus CBDCs pose a direct threat.
This week the Digital Pound Foundation will hold an event, The Geopolitical Case for a Digital Pound, where the Bank of England’s head of future technology will speak. This follows last month’s announcement that the BoE and the Treasury are jointly designing a “digital pound” that could replace cash by the end of this decade. All of this sounds reasonable enough.
But who is the Digital Pound Foundation? They present themselves as an “independent forum supporting the implementation of a well-designed digital pound”, and say their motive is to “drive the UK’s transition to a digital economy forward”. But they are probably more interested in promoting crypto. The board consists of three people: two founder-CEOs of relatively obscure crypto projects, and the “chief policy officer” of Ripple, the company behind the XRP token, who heads the Digital Pound Foundation, but happens to be based in the global hub of the crypto lobbying industry: Washington DC .
“The crypto industry’s main goal is to sell crypto . . . and to legitimize it,” said Martin Walker, a longtime crypto critic and director of banking and finance at the Center for Evidence-Based Management. “If CBDCs actually took off . . . it would completely destroy one of the crypto-narratives.”
Ripple is an example of sensible crypto itself. This is a company that sells itself to banks as a payment settlement solution, whose CEO Brad Garlinghouse said in 2020 that “once regulators understand that you’re not circumventing regulations, they get comfortable very quickly”. His confidence was misplaced: Later that year, the US Securities and Exchange Commission sued the company, alleging that it had “raised over $1.3 billion through an unregistered . . . digital asset securities offering’. (Ripple has rejected the claim, and the case is ongoing.)
The legitimization of crypto is also happening in British politics. Rishi Sunak suggested last year, while Chancellor of the Exchequer, that Britain should become a “global hub for crypto assets“. MPs have also established an all-party “central banking and digital currency” parliamentary group, whose secretariat is – surprise – a crypto company.
They can use real words and speak in full sentences; they can turn up at banking conferences and speak gloomily about financial inclusion; but we need to see this crypto crowd for what they really are: snake oil salesmen in sensible clothing.
