Crypto Expansion: Banks Profit, Who Pays the Price?

I get it. Crypto promised to be different. A new route around the gatekeepers, the cultural institutions that have long excluded so many. Decentralized finance, or DeFi, has long-held promise to drive financial inclusion. It gives historically marginalized communities an opportunity to participate in a more equitable system that doesn’t pit them against one another. Finally, a level playing field, right?

Now, the institutions crypto was created to disrupt are forcing their way through the door. They see an opportunity to make a killing and further consolidate their power even more. Now Standard Chartered and Deutsche Bank are making similar moves, looking beyond the US market. They’re lured by what they perceive as deregulating havens. Let's be clear: this isn't about innovation or financial freedom. It’s no secret that banks are constantly looking for new ways to increase the bottom line. I fear that, as always, the most vulnerable will be the ones forced to pay the price.

The story that is being told is that there is innovation through deregulation. Whose innovation are we talking about? The kind that enriches Wall Street’s bottom line, or the kind that really gives power back to the people? The Trump administration's actions, like dissolving the National Cryptocurrency Enforcement Team (NCET) and the SEC seemingly backing off from Coinbase, sent a clear signal: the doors are open for business, regardless of the potential consequences. This isn’t exclusive to crypto — it’s a widespread trend in the wrong direction. Remember the 2008 financial crisis? Deregulation was a big part of this, and we all paid the price. Now, we're potentially setting ourselves up for a repeat performance, only this time with a volatile asset class that many still don't understand.

Who Benefits From Easing Regulations?

I keep thinking about my cousin, Maria. And she is a single mom, juggling two jobs to keep the bills paid. She first learned about cryptocurrency a couple years ago and was immediately sucked into the promise of high returns overnight. Picture the situation if a bank were to tout crypto products to her. What they would likely do is minimize the risks and maximize the upside potential! What is she supposed to do when the market inevitably plunges, and she loses all of her savings? These are not hypothetical situations, they’re real threats to lives for Americans like Maria.

Where is the ethical responsibility? After all, these banks are meant to be the cornerstones of our economy, the trusted institutions that protect our financial future. Are they truly prepared to navigate and understand the nuances of crypto? Even more critically, will they prioritize consumer protection over industry profit? I'm not convinced.

Banks' Ethical Obligation To Customers?

Look at Anchorage Digital. They successfully lobbied their way into a banking charter, but only after extraordinary regulatory oversight and cost. That tells you something. It doesn’t just show you that these things aren’t simple though, it walks you through the legitimate concerns about the risk associated with undertaking these things. Anchorage aims to play the role of custodian in BlackRock’s Bitcoin Trust. What’s important here is they had to jump through a ton of hoops to get to this enviable position. Now, they have plenty of company from other crypto white knights like Circle, BitGo and Coinbase who are pursuing banking charters. This rush to connect with traditional finance, I fear means consumer protection will be a secondary priority.

In hindsight, the 2022 crypto crash should have been a wake-up call. Billions of dollars in Pension Protection Act funding far too quickly evaporated, and thousands upon thousands of lives were affected. Take that kind of volatility and imagine it being compounded by its incorporation into the legacy banking system. What is the policy response when crypto collapses and drags down the rest of the financial system? What would be the new systemic risks that would put the entire financial system at risk?

Crypto Crashes, Economy Collapses?

We, as Gen Z, are inheriting a world plagued with economic ambiguity. We hear it everywhere, in all forms of advice and guidance—save, invest, think ahead, be future-oriented. How can we do that when the rules keep changing, when the institutions we're supposed to trust are chasing profits at our expense?

We need stronger regulations. We need transparency and accountability. This crisis reminds us we need more protective policies that defend the most vulnerable among us, especially during a pandemic. The bills related to crypto and stablecoin regulations currently gaining traction are a step in the right direction, but they're not enough. It’s time we demand our elected officials to put the needs of American consumers ahead of corporate profits. The point here is that we need to keep banks accountable for the systemic risks that stem from banks’ crypto activities.

This isn't about being anti-crypto. It’s about being pro-consumer, pro-fairness, and pro-responsible innovation. It’s more about making sure that all of us, and not only a few, are benefitting from what crypto has to offer. We can and must do better to protect workers like Maria from exploitation. Institutions should not prey upon the community they are supposed to serve. The future of finance is still being written. Let’s ensure that it’s a future that benefits all of us—not just the commercial banks.

This isn't about being anti-crypto. It's about being pro-consumer, pro-fairness, and pro-responsible innovation. It's about ensuring that the benefits of crypto are shared by all, not just a select few. It's about protecting people like Maria from being exploited by institutions that should be serving them, not preying on them. The future of finance is being written now. Let's make sure it's a future that works for everyone, not just the banks.