Even the Smartest Investors Fall for Crypto FOMO

Even the Smartest Investors Fall for Crypto FOMO

One of cryptocurrency’s spiritual forebears, Timothy C. May, predicted in the 1990s that untraceable digital cash would allow online casinos, bank secrecy and money laundering to flourish. Although laws would be dodged, he said, the individual anonymity and freedom would be worth it — at least, until the inevitable government backlash.

This cycle is playing out almost three decades later, as regulators take a fresh crack at the $2.4 trillion crypto sector that’s ballooned largely out of their reach. Crypto executives were grilled by US lawmakers on Wednesday after a series of probes and fines into trading platforms amid a post-Covid digital gold rush. The bosses acknowledged the need for more oversight but warned that draconian rules would chase firms overseas.

The march toward more regulation is underway, and for good reason. While the execs defended their work policing bad actors, for the most part, anti-money laundering standards and client identification controls still look patchy. One survey of 16 platforms in March found that only four were subject to “significant” rules related to trading. Exchange activity primarily takes place in offshore jurisdictions. Binance, with no formal head office, is described as being “everywhere and nowhere.” Theft, fraud and hacks are rife.

Yet what’s