Like Crypto Tanks, Tech Veterans Question Blockchain’s Promise of Economic Salvation

Crypto champions say digital assets can bring excluded communities into the financial system and help marginalized investors grow their wealth. But some critics question whether the new tools present a real opportunity or a threat.

“Predatory inclusion” is the concept of increased access to products or services, only in terms of exploitation or dangers that actually undermine potential benefits. The phrase has been applied to housing and education loans targeted at minorities. Increasingly, it’s also cropping up in discussions of crypto, veteran tech journalist and New York Times opinion podcaster Kara Swisher told a working group on the future of money at the DealBook DC policy forum last week.

“There has been a really growing anti-cryptocurrency movement among a lot of old-school internet folks,” Swisher said. Noting that the crypto space is riddled with scams, he added that predatory listing “is really real.”

But Cleve Mesidor, a black woman who heads the nonprofit Blockchain Foundation, challenged the notion “that we’re now being duped in some way.” She says that she believes the predation concerns are based on a false assumption.

“The reality is that Black and Latino innovators and investors are leading the adoption in the space. We’ve been doing it for the last five to eight years, and we’ve been doing it by educating our communities,” said Ms. Mesidor. “The biggest risk to my community, my contemporaries, has been traditional finance.”

That history of predation cannot be ignored, agreed Alondra Nelson, who heads the White House Office of Science and Technology Policy.. But Ms. Nelson, a black woman, suggested that cryptocurrencies might be no different. She has the same concerns about conflicts of interest and misaligned incentives in crypto that apply in traditional finance, but there are fewer regulations to limit players in the new industry.

“That will take advantage of those who can least bear the losses or take that risk,” he said.

Many crypto companies operate in regulatory gray spaces, where investors have few of the protections that exist for other financial products. And cryptocurrencies are volatile: Bitcoin has fallen from a high of around $68,000 in November to around $20,000 this week, and the total market capitalization of all cryptocurrencies fell to less than $1 trillion from a roughly three-fold high. more last year.

Uncertainty and price swings suggest to Cornell University economics professor Eswar Prasad, author of the 2021 book “The Future of Money,” that cryptocurrencies are purely speculative assets and likely not a path to economic salvation. overall overall.

Mr. Prasad says he sees “the real promise of blockchain technology”, which allows for greater access and transparency, but fears the new industry will indeed repeat old patterns. “Right now, we have this fantastic technology, which could take us to a more glorious world. But there is a great risk of subversion..”

Participants: Caroline Crenshaw, Commissioner, US Securities and Exchange Commission; Alondra Nelson, Deputy Assistant to the President, Chief of the Office of Science and Technology Policy; Kara Calvert, Head of US Policy, Coinbase; Kristin Smith, Executive Director of the Blockchain Association; Jonathan Levin, co-founder of Chainalysis; Eswar Prasad, professor of economics, Cornell University; Michele Korver, Director of Regulation, Crypto, Andreessen Horowitz; Cleve Mesidor, Executive Director, Blockchain Foundation; and Lindsey Parker, Chief Technology Officer, Washington, DC

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