As Crypto Tanks, Tech Vets 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 on exploitative or unsafe terms that actually undermine potential benefits. The phrase has been applied to housing and education loans targeting minorities. Increasingly, it also appears in crypto discussionsveteran tech journalist and New York Times Opinion podcaster Kara Swisher said during a panel discussion on the future of money at the DealBook DC policy forum last week.

“There has been a really growing anti-crypto movement among a lot of really old-school internet users,” Ms. Swisher said. Noting that the crypto space is full of scams, she added that predatory inclusion “is actually real.”

But Cleve Mesidor, a black woman who heads the nonprofit Blockchain Foundation, challenged the idea “that we are now somehow deceived”. She says she believes concerns about predation are based on a false assumption.

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

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

“It will benefit those who can least bear the loss or bear that risk,” she said.

Many crypto companies operate in regulatory gray spaces, where investors enjoy few of the protections that exist for other financial products. And crypto is 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 has fallen below $1 trillion by from a peak of about three times as high last year.

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

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

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

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