NCLC along with other consumer organizations filed comments in response to the United States Department of Treasury request for comments on ensuring the responsible development of digital assets.
The comments explained that we see little to no legitimate use for cryptocurrencies and few, if any, potential benefits that are not heavily outweighed by the high degree of risk, harm, and evasion of consumer protection laws:
- Individual consumers are investing money they cannot afford to lose in speculative assets that will often crater in value and trigger high fees if the consumer attempts to cash out.
- Scams using cryptocurrencies are exploding off the charts.
- Stablecoins are not as stable as they claim and exist primarily as a gateway to and support for unstable and dangerous cryptocurrencies.
- As a payment method, cryptocurrencies have no protections and do not comply with laws that require protecting consumers from unauthorized use and errors.
These problems are serious for all consumers, especially for low-income consumers with no buffer of assets to lose, and for Black and Latino communities, which disproportionately invest in cryptocurrencies. Cryptocurrencies are becoming the latest in a long line of devices used to strip wealth from communities of color and push them further behind.
Regulators should do as much as possible to discourage expanding use, which is simply unsafe. We see few prospects for “responsible” development, as the problems with cryptocurrencies are a feature, not a bug.
With respect to a potential United States central bank digital currency (CBDC), we have yet to hear a plausible case for how a CBDC could expand financial inclusion or otherwise have significant benefits for consumers, especially in an intermediated model. On the flip side, a CBDC poses significant potential risks to consumers, including threats to privacy, the potential for surveillance of and control over those who receive government benefits, fraud at greater scale and velocity, and unclear application of consumer protections.
The full comments make these points at greater length.