The National Consumer Law Center, on behalf of its low-income clients, submitted a statement for the record on crypto-assets for consideration in the above hearing.
We see little to no legitimate consumer-facing use for crypto-assets and few, if any, potential benefits that are not heavily outweighed by the high degree of risk, harm, and evasion of consumer protection laws. In particular:
- 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 crypto-assets are exploding off the charts and enabling criminals to steal money anonymously, quickly and irreversibly.
- Stablecoins are not as stable as they claim and exist primarily as a gateway to and support for unstable and dangerous crypto-assets.
- As a payment method, crypto-assets have no protections and do not comply with laws that require protecting consumers from unauthorized use and errors.
- Crypto-assets have no potential to enhance financial inclusion and instead are just the latest in a long series of products that strip wealth from communities of color and push them further behind.
These problems are serious for all consumers. But they are especially dangerous for low-income consumers with no buffer of assets to lose, and for Black and Latino communities, which disproportionately invest in crypto-assets.
Congress and regulators should do as much as possible to discourage expanding use of crypto assets, which are simply unsafe. While the underlying blockchain technology may have legitimate applications, we see few prospects for consumer-facing use of crypto-assets, as the problems are a feature, not a bug.
For more detail on these points, see the comments that we and other consumer organizations submitted to the Department of Treasury in response to its Request for Comment on Ensuring Responsible Development of Digital Assets.