What Elizabeth Warren Doesn’t Get About Crypto

My Open Letter to the Crypto Naysayers

Note to Readers: If anyone knows Massachusetts Sen. Elizabeth Warren, maybe slip her a copy of today’s dispatch. 

Dear Sen. Warren (and other crypto naysayers), 

I know you established yourself as an advocate for the “little guy” trying to navigate the shark-infested financial markets. I know your career has been built on attacking the financial-services industry and Wall Street for all the shady things they do to separate consumers from the dollars in their wallet. 

But your most recent plea this week for the Securities and Exchange Commission and Treasury Secretary Janet Yellen to lower the hammer on crypto shows that you aren’t so much about protecting the little guy as you are about creating the perception that you’re protecting the little guy. 

Let’s see…you worry that crypto will undermine the banking industry.  

Yes—it will.  

That is entirely the point. And it’s entirely a good thing, a fact you seem to misunderstand. 

The banking industry is not consumer-friendly. Never has been. Never will be. 

Banks are not transparent. Banks are the reason America’s housing market crashed in 2007.  

Banks have an ongoing history of segregation, racism, and red-lining. Banks in 2019 robbed consumers of nearly $252 billion in service charges for so-called “non-interest income” items such as overdraft fees, ATM fees, and probably for consuming oxygen in or near a bank branch.  

That’s $1,200 for each of America’s 209 million adults. 

Then there’s the fact that 7.1 million American households have no access to traditional banking, according to government data. That forces them to rely on an even-shadier world of payday lenders, pawnshops, and others charging usurious interest rates and, thus, helping keep down the downtrodden who cannot break this cycle of paycheck, loan, and interest payments so large they require a bigger loan when the next paycheck arrives. 

But if I correctly understand your position, all of that is a good thing relative to crypto? 

Because now you’re defending banks just as decentralized finance (DeFi) comes along to bring power and opportunity back to us little guys.  

Remind me again: Why do I need Bank of America or Regions Bank when they pay me nothing on my money and charge me for Every. Little. Thing?  

I can get 7%, 10%, almost 13% annual interest on my money by depositing low-risk cryptocurrencies called stablecoins at a DeFi bank, and I won’t get hit with a $4.75 surcharge for using an ATM on a day that ends in a Y. 

I don’t have to endure a financial proctology exam to obtain a loan. Crypto-banks don’t care about my skin color or my ZIP code. Only whether I have collateral or not. 

Are there some bad actors in crypto? Sure. 

But banking as an industry abuses its customers just because it can. 

Then, you insist that crypto must be reined in because it’s not eco-friendly in an age when the world worries about carbon footprints. That’s a naysayer’s disingenuous stalking horse, not a fact. It shows that you’re either ill-informed, thinking linearly, or purposefully subverting reality. 

Yes, crypto does consume lots of power. Mining one bitcoin reportedly produces about 210 tons of carbon a year. 

But banking is virginal purity when it comes to carbon emissions? 

All those branches and regional offices built with materials that had to be mined. All the electricity to run multiple bank branches on seemingly every street corner. All that wasted paper mailing me notices to let me know I’m eligible for yet another credit card or a home-equity line-of-credit for a home I don’t have.  

And then there’s all the energy used in what’s known as “financed emissions” generated by the banking industry’s lending and investing activities. The nonprofit agency CDP calculated that financed emissions hit 1.04 gigatons of carbon last year. I’ll save you the math: That’s 45 times more than bitcoin produced (and much bitcoin mining is now going green through wind, hydro, and geothermal power). 

That 1.04 gigatons…that was in a pandemic year; it represented 3% of all global emissions in 2020; and CDP says it likely undershoots reality “significantly.” 

Crypto has its issues. Crypto has a period of growing pains it must get through. But protecting entrenched banks and their 20th century approach to legalized thievery isn’t consumer-friendly. It’s a politician spouting platitudes based on flawed thinking. 

Better to educate yourself about the realities of crypto and how it benefits consumers (and businesses and society) than to tar the upstart and try to beat it down. You will lose that fight because you are attacking the future. 

That’s not progressive. 

It’s Luddite.