Much as it can be enjoyable to poke fun at the crypto bros — with their silly memes, irritating acronyms, puerile jokes and frankly ridiculous ideas about the world — I have to confess: I don’t believe they’re the main problem. As far as I’m concerned it’s the earnest, strait-laced types who insist that we should all be taking the whole thing terribly seriously who pose the biggest threat to our survival as a rational and prosperous society. Welcome to the plague of what I like to call “sensible crypto”.
What I am talking about when I use this oxymoron is the men in suits — and it is most commonly men, though there are women too — who will tell you that sure, the vast majority of cryptoland is a gigantic grift, but that their crypto coin is going to change the way we send money around the world, making the financial system fairer and more inclusive and democratic.
It’s the political leaders who insist that we must embrace this noxious industry in order to stay at the cutting edge 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 bosses who don’t care about the 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 ill-understood industry that should be thought of as something between a multilevel marketing scheme and a Ponzi scheme, that preys on — and indeed relies upon — those who cannot afford to gamble their money away.
One way these sensible crypto types exert influence is via central bank digital currencies. You might think these CBDCs should have little to do with crypto, given they would be centrally issued and controlled, and that cryptocurrencies are not used as money but as a means of speculating. And you would be right. But the argument for CBDCs — that they could allow for quicker, cheaper, more efficient transfers of money — is also one of the arguments pushed by crypto, and thus CBDCs pose a direct threat.
This week the Digital Pound Foundation will be holding an event, The Geopolitical Case for a Digital Pound, at which the Bank of England’s head of future technology is due to speak. This follows last month’s announcement that the BoE and Treasury are jointly designing a “digital pound” that could replace cash by the end of this decade. This all sounds sensible enough.
But who are the Digital Pound Foundation? They pitch themselves as an “independent forum supporting the implementation of a well-designed digital pound”, and say that their motive is to “drive forward the UK’s transition to a digital economy”. But they are probably more interested in driving forward crypto. The board of directors consists of three people: two founder-CEOs of relatively obscure crypto projects, and the “head of policy” at Ripple, the company behind the XRP token, who chairs the Digital Pound Foundation but who happens to be based in the global hub of the crypto lobbying industry: Washington DC.
“The crypto industry’s number one objective is to sell crypto . . . and to legitimise it,” Martin Walker, a longtime crypto critic and the director of banking and finance at the Center for Evidence-Based Management, tells me. “If CBDCs actually took off . . . it would totally destroy one of the crypto narratives.”
Ripple is an example of sensible crypto in its own right. 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 you’re not circumventing regulatory frameworks they get very comfortable very quickly”. His confidence was misplaced: later that year, the US Securities and Exchange Commission sued the company, alleging that they had “raised over $1.3bn through an unregistered . . . digital asset securities offering”. (Ripple has denied the claim, and the case is ongoing.)
The legitimisation of crypto is happening in UK politics too. Rishi Sunak suggested last year, while he was chancellor of the exchequer, that Britain should become a “global cryptoassets hub”. MPs have also established a “central bank and digital currency” all-party-parliamentary group whose secretariat is — surprise — a crypto company.
They might use real words and speak in complete sentences; they might turn up at banking conferences and speak sombrely about financial inclusion; but we must see this crypto crowd for what they really are: snake-oil salesmen in sensible clothing.