Opinion: Crypto industry comes with great opportunity, great risk
The whole digital assets industry, commonly called “crypto,” is booming in Illinois and in our country.
It is growing at geometric rates, has branched into many forks and products, and is attracting millions of new buyers, sellers, traders and innovators.
Crypto’s approach to the broader marketplace now is on the verge of a bigger explosion.
With great opportunity comes great risk.
Crypto is not a scam, but it attracts a lot of scammers because it is not easily understood by the public, provides anonymity, and allows a quick getaway.
Many of these scams have been around since financial institutions were invented, but now they have new tools for tapping into fear and confusion.
As crypto transactions have increased, and new customers are attracted in great numbers, reported frauds also have increased. The FBI has reported fraud losses in 2023 were more than double those from the previous five years combined. Thousands of Illinoisans have reported losses due to fraud in the past two years. These often occur among unbanked people in struggling communities, and seniors who are less adept with modern tech.
In Illinois, we need a balance between fostering innovation and growth in high-tech industries, and protecting consumers from fraud and abuse.
The Illinois Digital Assets and Consumer Protection Act (DACPA) is designed to do both. The act would require digital asset businesses to register, have measures to address cybersecurity risks and establish consumer protections, including disclosures.
If we do not put the right guardrails around the crypto industry, both it and its customers will lose opportunities for growth. Requiring crypto companies to have specific safety requirements is no different from requiring those who want to drive to have a license, or requiring residential buildings to have smoke detectors. These requirements do not prevent people from driving and buildings from existing; they build a safer environment. An environment of trust.
The bill is not an attempt to discourage innovation in blockchain technology or the growth of digital assets.
An essential part of this bill is that it exempts companies who use block chain for managing goods and inventory, peer-to-peer transactions, digital contracts, artists selling NFTs, and developers of supportive and innovative software. It also exempts those already subject to regulation by other relevant government agencies such as the Commodity Futures Trading Commission or U.S. Securities and Exchange Commission. In fact, the intent of the bill is to foster an environment where innovators and entrepreneurs can grow into broader markets and achieve their goals.
The visions of all those who believe in crypto and its growth will only come if their biggest obstacle is overcome — a lack of credibility in the wider marketplace.
A recent Pew Research Center report shows only 23% of adult Americans have confidence that crypto is reliable and safe. Adding to this skepticism have been many cases of fraud, abuse, losses, and even bank and company failures related to the industry.
It’s time for some crypto-bros to put on their big boy pants.
It’s time for the many responsible leaders in this industry to help develop ways to minimize fraud and abuse, and to help resist the leeches and scammers who could ruin everyone’s reputations.
We can move forward together.