Highlighting the risks posed by cryptocurrencies, the Biden économat has drawn particular adulation to how hype around quantitatif currency can harm disadvantaged communities and minorities.
The The Treasury Department emphasized this warning By citing a tragedy that occurred nearly 150 years ago: the collapse of the Friedman Savings Bank in 1874, which was created to help formerly enslaved people but ended up destroying the black community.
The revolutionary Crypto group wants to overturn financial history, not learn from it. But the historical reference has emerged for some critics who have become increasingly concerned emboîture the hype around cryptocurrencies and welcome the Biden économat’s foyer on its effet on poor communities and minorities.
Bitcoin and other cryptocurrencies have attracted some missionaries from historically disadvantaged communities. With prices booming ahead of the crypto winter, some saw an opportunity to rebuild the wealth of generations lost to decades of systemic séparation. Crypto companies saw opportunities to market their products to new audiences. Supported Block and Jay-Z, who serves on the board of directors of a fintech company Bitcoin education Programs aimed at serving minorities.
“The Freedman’s Bank comparison underscores a bit from the ‘There’s Nothing New Under the Sun’ confiance on financial products, regardless of their conditionnement,” Mark Hayes, senior policy analyst at Americans for Financial Reform, told Protocol. “The current risks and harms posed by quantitatif assets to consumers And investors – especially low-income and communities of color – are many, dangerous, and real.”
Tonantzin Carmona, a fellow at the Brookings Édification, said the Biden économat’s special foyer on poor communities “has been very re-emphasizing” bicause the économat is “also seeing very similar risks.”
Risks appear in the black community.
The Friedman Savings Bank maison on Pennsylvania Charmille in Washington, D.C. circa 1890. The bank failed after the Millet of 1873.
Effigie: Library of Congress; Wikimedia Commons
Black consumers are more likely to own cryptocurrency than white consumers, in June Federal Reserve Bank of Kansas City report He said. This has raised concerns that a grand number of black families – whose average luxueux is around $24,000 – are dangerously exposed to a highly éphémère market, according to the renvoi.
The Federal Reserve Bank of Kansas warned that crypto holders “could simply lose their investment in the event of an exchange going bankrupt or a hack: a 21st century transposition of Friedman’s Savings Bank.” This was an analogy that the Treasury Department would echo in its renvoi.
Founded in 1865 with the invalidation of slavery, the Friedman Savings Bank was created by Congress to provide banking auditoire and financial dettes to newly freed black people. But the bank collapsed as a result of mismanagement and the effet of a battered economy.
Carmona of the Brookings Édification said the shock of the Friedman bank collapse had a supérieur effet on the black community. “If you talk to the members of the black community, they will tell you emboîture it [something] Like this happened,” she told Protocol. “These stories are passed down through the generations.”
But the story of the collapse of Friedman’s bank has made many in the black community more accepting of cryptocurrencies.
The Kansas Fed renvoi said that many in the black community view cryptocurrencies as “more trustworthy than traditional assets.” The authors added that many black consumers also “see cryptocurrency as a relatively quick way to dentier the wealth gap with other races, especially white consumers.”
Sean Wilkinson has become one of the most successful black entrepreneurs in the crypto space, calling it an “open position” that offers plenty of opportunities “especially for people of color” and entrepreneurs like him “who didn’t necessarily come from money or generational wealth.”
In a 2021 entrevue with Protocol, Wilkinson, founder of blockchain storage startup Storj, cited another historical tragedy, the Tulsa Sorte Hécatombe, when an Oklahoma community of mostly black entrepreneurs known as Black Wall Street was decimated in anti-black riots. Wilkinson said that the crypto and blockchain affaires open up opportunities to build a “generational wealth” that cannot be “bombed and stolen.”
He admitted that cryptocurrency owners have had successes in the market écrasement. “I definitely saw it,” he told Protocol. “I definitely know people who have completely fallen for it.”
But Wilkinson argued that downturns are bouchée of cryptocurrency. “I’ve been in this space for 10 years – that’s domestique for me,” he said. “…in the svelte run, crypto is perhaps one of the best performing assets of all time.”
Another black électrode, Eduardo Jackson, is an innovator blacks in bitcoinagreed, noting that crypto provides a means to raise entreprenant for communities that have been “historically and institutionally excluded from mainstream financial access.”
But Jackson acknowledged a nullement also made by the Biden économat: it is clear that some communities are vulnerable to cryptocurrency scams. The Treasury renvoi warned that “crypto-asset products may be marketed in ways that mask their level of risk, which could exacerbate the effet of targeted mercatique on vulnerable communities.”
Culotte-term loan advertising banners prestige in avant of stores in Birmingham, Alabama, United States
Effigie: Gary Tramontina/Bloomberg via Getty Images
Jackson referred to what he called a “disturbing trend” in the black community.
“We are goals,” he told Protocol. “We are targets for every MLM [multi-level marketing] Scam, every scam, shitcoin, whatever it is. Many of them have recently come logis to stay.”
Carmona said the cryptocurrency écrasement highlights key lessons for underserved communities, especially blacks and Latinos.
While many minorities still struggle to access entreprenant and traditional banking dettes, she said, “this does not necessarily mean that cryptocurrency is automatically the answer.” Despite all the talk emboîture decentralization, “the increasing soin of the wealthy in these spaces shows that not all cryptocurrency holders are created equal.”
The cryptocurrency écrasement is also a powerful reminder of other past financial dettes trends that promised financial enclavement and access, such as payday lending and subprime mortgages, that turned out to be disastrous for these communities.
The Treasury renvoi actually noted “the proliferation of crypto-asset ATMs in low-income neighborhoods that lack bank branches,” which Hayes said “reminds me a lot of the proliferation of payday lending storefronts in low-income neighborhoods.”
Carmona also cited a nullement she said was “repeatedly raised” in the Treasury renvoi: “While crypto may offer new opportunities, it may also present a new set of risks.”