Cryptocurrency is earning a bad name for good reasons lately.
The value of Bitcoin, the public-market face of the largely unregulated cryptocurrency industry, lost two-thirds of its value over the last year, compared to 25% for the S&P 500. That said, hot-to-not Bitcoin was a much better investment over five years.
The Federal Trade Commission just reported that cryptocurrency, although yet a mainstream payment method, is “an alarmingly common method for scammers to get peoples’ money. Since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams; about one out of every four dollars reported lost, more than any other payment method.”
There’s no central regulator to flag suspicious transactions and no way to reverse a transaction. Most don’t understand crypto and are easy prey for online scammers.
We’re inundated with pitches from Super Bowl ads to Hollywood celebrities. Kim Kardashian recently paid $1.26 million in penalties and disgorgement for touting a crypto-asset security without disclosing that she was paid $250,000 for a post on Instagram about EMAX tokens, a cryptocurrency.
SEC Commission Chair Gary Gensler has called the crypto market the “Wild West.”
The Financial Stability Oversight Council, in a report this month ordered by Treasury Secretary Janet Yellen, concluded that “crypto-asset activities could pose risks to the stability of the U.S. financial system” if their interconnections with the traditional financial system and size continue to grow “without adherence to … appropriate regulation,”