Crypto Industry Portrayed 'Illusion of Respectability', Paul Krugman Says

The cryptocurrency industry bought itself an "illusion of respectability" after luring investors with "technobabble and libertarian derp," economist Paul Krugman wrote in The New York Times.

• The Nobel Prize winner wrote an opinion piece Monday examining how the industry was able to market itself to respectable institutions and individuals.
• The industry "has been spectacularly successful at marketing itself, creating an image of being both cutting edge and respectable," he wrote.
• Krugman cited, for example, digital payments app Venmo inviting users to "begin [their] crypto journey" on its homepage and famous universities offering programs to learn about crypto.
• "I doubt there was any corruption ... Still, there clearly were and are financial rewards involved. I don’t know how much money Venmo makes from people buying and selling crypto on its platform, but it’s certainly not offering the service out of sheer good will. If you want to take, say, M.I.T.’s online blockchain course, it will cost you $3,500."
• With this degree of mainstream acceptance, according to Krugman, crypto became "too big to regulate."
• While the recent downturn in the crypto markets has made effective regulation "politically possible," the opportunity must be seized by central banks and other bodies "before crypto stops being a mere casino and becomes a threat to financial stability," Krugman wrote, referencing a recent speech on crypto regulation by Lael Brainard, the Federal Reserve vice chair.
• Krugman has expressed skepticism about crypto on several occasions, going back to 2013 when he dubbed bitcoin "evil." He wrote in January this year that he saw parallels between crypto and the subprime mortgage crisis of the 2000s.

Read more: Why the Crypto Crash Will Accelerate Regulatory Action