Crypto

Cryptocurrencies, despite their promises, have many negative impacts and pose grave risks to the financial system. Their energy consumption is high, their complexity makes them susceptible to destabilizing booms and busts, and their decentralization is an illusion as power and wealth still tend to concentrate in the hands of a few intermediaries. The crypto ecosystem is plagued by hacks and scams and lacks consumer protection regulation. The value of crypto assets is driven purely by demand and early investors can profit only if they can find new investors to buy in, leading to a system where people have to trust largely unregulated and sometimes unidentified intermediaries. Policymakers must consider the negative impacts of crypto and determine whether it can deliver on its promises before deciding whether to regulate it.