Amid a spate of high-profile crypto project failures, skeptics are asking what crypto is good for other than speculative gambling. Although some see the onset of “crypto winter” as vindicating suspicions that the space was always just one big casino, the very issues highlighted by recent crypto firm bankruptcies – questionable risk management, opaque balance sheets, and crypto deposits’ vulnerability in bankruptcy – actually help to answer the question: what’s the point of crypto?
In a word, decentralization. While this term can be employed in handwavy hype, the recent bear cycle helped to reify the benefits of disintermediated finance. Policymakers should pay close attention to the resiliency features of decentralized projects – including automated collateral liquidations, public transaction data, and self-custodied assets – before baking faulty assumptions about crypto risks into regulations.
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