Op-Ed: America's Embrace of Cryptocurrency Could Lead To A Financial Crisis
Editorial Note: Opinions and thoughts are the author's own and not those of AFROTECH.
In recent years, cryptocurrency has been viewed as a risky investment, hyped up by the mega-rich and stealthy hackers. Now, thanks to President Donald Trump, America is fully embracing cryptocurrency as a legitimate form of currency. Without any guardrails or protections, the U.S. could see itself heading towards another financial crisis.
Cryptocurrency was anonymously created in 2008 but didn't gain mainstream appeal until around 2020. The government, or any banking authority, doesn't have oversight over the digital currency, making it highly volatile.
While the Biden administration pursued cryptocurrency fraudsters, the Trump administration had a different approach, embracing the industry. President Trump signed an executive order in the first week of his second term supporting cryptocurrency and even released his own meme coin. There are rarely any regulations on crypto, and from the policies this presidential administration is pushing, it's clear it isn't interested in passing meaningful legislation to curb profits.
A report written by economists from the Federal Reserve Bank of New York, warns that if the U.S. continues to let cryptocurrency operate without regulation, it could be heading toward a repeat of the Great Recession.
The lack of federal oversight means that consumers risk losing their money when crypto crashes, which has happened multiple times. Cryptocurrencies experience periods of extreme growth followed by crashes. Since 2011, there have been significant crashes like the crash of 2020 due to the COVID-19 pandemic, and again in 2022 with the bankruptcy of FTX. Any news, from Elon Musk sneezing to Trump's tariffs, could affect the market. The intertwining of cryptocurrency in financial markets, along with consumers taking out loans to make bets on crypto, could have negative consequences.
In Black communities, there has been a focus on educating people on investing in cryptocurrency with the hope of building generational wealth. There is a general distrust of traditional banking systems that not only mislead consumers but can also discriminate. However, feeding into the cryptocurrency trend without anything else behind it won't fill their pockets.
We need a complete overhaul of the cryptocurrency industry with regulations and protections similar to those in our banking system. Cryptocurrency advocates claim that digital currency is the best alternative to traditional banking because it's free from government control and inflation, but having crypto held to the standards of our banking system ensures that everyone's assets are protected.
We certainly have an issue with our current banking system that needs to be addressed, but allowing the cryptocurrency industry to run unchecked is not the solution. You can't build generational wealth on the bed of an industry as risky as this one.
Unfortunately, when a booming industry lacks federal oversight, it fills the pockets of America's wealthiest investors; they will do everything in their power to influence the laws around us. However, regulations aren't just for keeping track of their money; they can also help prevent frequent crypto crashes.
The cryptocurrency industry is also rife with scams, as consumers can be tricked into decentralized exchanges, resulting in thousands of dollars in losses. If you're a victim, then there is no governing entity to turn to because it doesn't exist.
The post Op-Ed: America's Embrace of Cryptocurrency Could Lead To A Financial Crisis appeared first on AfroTech.The post Op-Ed: America's Embrace of Cryptocurrency Could Lead To A Financial Crisis appeared first on AfroTech.
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