The newly founded “global community of technologists” has sent a letter to US Congress advocating skepticism of the crypto industry. The group – featuring 26 computer scientists and academics – combats the positive spin put forth by cryptocurrency lobbysits thus far.
No Real Benefits
Thursday’s letter – directed toward House and Senate Leaders alike – argues that crypto assets are not “unreservedly good”. It calls for the creation of a regulatory “safe haven” from so-called “risky, flawed, and unproven digital financial instruments.”
“We strongly disagree with the narrative — peddled by those with a financial stake in the crypto-asset industry — that these technologies represent a positive financial innovation and are in any way suited to solving the financial problems facing ordinary Americans,” reads the letter.
Regulation from congress and the SEC affecting digital assets has been notably minimal, and slow to arrive. Influencers on both sides of the crypto debate have shown disappointment with Washington’s failure to take concrete action.
Only recently has congress begun to hold hearings with blockchain experts to better understand the nature of the asset class. However, many of those asked have been crypto industry leaders themselves, including stablecoin providers and exchange CEOs.
The technologists highlighted flaws pertaining to blockchain’s utility in payments, including its inability to reverse transactions and poor financial privacy. Crypto CEOs agree with this, as the lack of privacy is also what makes crypto a poor choice for criminals.
The letter ultimately claims that blockchain provides “few, if any,” economic use cases, and is “unsuitable” for large-scale economic activity.
While the letter has very few positive things to say about crypto, it details a host of problems. One of these is the “massive climate emissions” caused by mining on proof of work chains like Bitcoin.
Mining is, in fact, one area that regulators have begun paying close attention to, and are cracking down upon. New York, for instance, is already preparing to ban carbon-based mining. Meanwhile, congressional Democrats have already requested the environmental protection agency to investigate mining facilities.
Crypto is also claimed to be a tool for ransomware crime, scams, and other criminal activity. While scams are still prevalent in the space, data shows that the share of criminal transactions across crypto is falling over time.
“We need to act now to protect investors and the global financial marketplace from the severe risks posed by crypto-assets and must not be distracted by technical obfuscations which mask an abject lack of technological utility,” the letter concludes.