ISTANBUL, TURKEY – APRIL 16: A woman walks past the entrance of a cryptocurrency exchange office on … [+]
Remember when cryptocurrency was supposed to make the world a better place?
In the pre-FTX era, before Sam Bankman-Fried fell from power, I spent a lot of time researching, reporting and explaining the enigmatic nature of blockchain technology and its potential for financial inclusiveness.
Cryptocurrency has lured people with the idea that it could be a way to achieve financial prosperity. This has been seen as a loophole from traditional financial systems that have deep-rooted racial biases and do not meet the needs of marginalized communities and people without a conventional source of income.
However, the collapse of cryptocurrency markets has cast a shadow over this narrative. The demise of two crypto-friendly banks, Silvergate Capital Corp. and Signature Bank, over the course of this year, adds complexity to the ongoing drama that has momentarily eclipsed the broader debate on financial inclusion.
Unfortunately, in pursuing this new financial frontier, we have allowed the same voices to shape its course, deviating from its original intention.
Cryptocurrency’s core mission – to create a new financial ecosystem free from existing inequalities – requires individuals from diverse backgrounds, including women and people of color, to take the lead in building it.
These participants have a unique perspective on the needs of the financial landscape, given their experience with its inherent gaps.
A double-edged sword
The COVID-19 pandemic has seen an unprecedented rise in cryptocurrency adoption, with historically low interest rates encouraging borrowing and speculation in high-risk assets.
This was evident in 2021 with the proliferation of crypto apps, trading platforms, and even cryptocurrency ATMs, making digital coin assets seem easy.
However, the euphoria over these developments was short-lived, with a dramatic crash in 2022 leading to massive losses and insolvencies. As largely unregulated assets, cryptocurrencies are inherently volatile and lack protection mechanisms like deposit insurance, making them vulnerable to fraud, hacking and other schemes.
Despite these challenges, about 20% of Black, Hispanic and Asian adults in the United States have engaged with cryptocurrency through purchase, trading or use, according to surveys by Pew Research Center in 2021 and 2022.
Additionally, cryptocurrencies still offer a tantalizing prospect of peer-to-peer transactions without intermediaries such as banks or government agencies, thereby providing individuals with ways to accumulate wealth that might otherwise be inaccessible.
A unique opportunity
One company finds itself in a unique position in the ever-evolving saga of cryptocurrencies. OnlyFans, a platform dedicated to providing financial options for content creators of all kinds, sits at a crossroads in the crypto debate. Its mission is to help creators monetize their work, which has become increasingly vital, especially for adult content creators.
The urgency of this mission becomes clear when you consider that nearly two out of three people working in the adult industry have suffered the loss of a bank account or other financial tools. Surprisingly, almost 40% have had their accounts closed in the past year, according to data of the Free Speech Coalition. This alarming statistic highlights the urgent need for financial services that can operate beyond the judgment of traditional banking institutions.
So when reports surfaced that OnlyFans parent company Fenix International had invested $20 million in Ethereum
ETH
between 2021 and 2022, as part of its working capital, it has naturally sparked curiosity about the platform’s potential plans to leverage cryptocurrency as a payment option for its creators.
Sue Beeby, director of communications at OnlyFans, clarified the company’s position. She told me in an email that Ethereum’s holdings were diversified as part of their parent company’s working capital, unrelated to the creators’ operations. Additionally, “the anonymity associated with crypto means we have no plans to implement crypto as a payment method on OnlyFans,” she said.
This cautious approach is wise, particularly given the volatility inherent in cryptocurrencies. Concerns about digital currencies, ranging from wild price swings to security risks, have caused many companies, including OnlyFans, to be hesitant to fully adopt them.
Nonetheless, crypto advocates like Tyrone RossCEO and co-founder of Turnqey Labs, Inc. and president and founder of 401 Financial, a registered investment advisor, astutely explains that cryptocurrencies offer compelling benefits when viewed through the lens of financial inclusion .
“Crypto doesn’t offer complete anonymity,” he explained in an interview. But this guarantees individuals confidentiality and security in their transactions. The public record, similar to a car’s license plate, can be traced, but the private key, like vehicle keys, remains essential for authorizing transactions. This mechanism provides a layer of protection and confidentiality.
Additionally, the relevance of digital assets cannot be overstated. Last week, PayPal
PYPL
While the potential of cryptocurrencies to catalyze financial inclusion is undeniable, unlocking this potential requires a collaborative effort between governments and financial institutions to establish a regulatory framework. Such a framework must ensure consumer protection, prevent money laundering and promote innovation in the crypto space.
Tale as old as time
Indeed, the concern shown by regulators and companies like OnlyFans is not unjustified. Numbers like Maxine Waters maintaining vigilant oversight over the cryptocurrency landscape, concerned about the lack of a strong federal framework to govern digital assets like stablecoins. With PayPal’s stablecoin reaching over 435 million users worldwide, it has the potential to impact an impressive number of consumers.
Consumers may be exposed to unsavory actors lurking in the digital currency space without oversight. Waters passionately advocates for the urgent implementation of consumer protections at the federal level to protect individuals who venture into the realm of digital assets – a move focused on safeguarding U.S. interests rather than controlling power.
In this complex environment, a call for bipartisan unity is felt. As the cryptocurrency and fintech juggernaut advances, regulators and policymakers grapple with the daunting task of balancing innovation and protecting interests – a story as old as time.
Achieving this balance is an ongoing process that requires collaboration, adaptability and an unwavering commitment to consumer protection and technological advancement. It’s a quest that holds immense importance as digital assets continue to reshape the contours of the financial landscape.
Satoshi Nakamoto created blockchain technology for access to financial inclusion, freedom and empowerment, Ross said.
“That’s why good people got into cryptocurrency, not to get rich,” he said. “Being able to provide access to people, regardless of their skin color, regardless of gender, regardless of religion, and regardless of job – they deserve the same access to banking as Larry Fink and Jamie Dimon, and they don’t There is no need to be despised.”
My money is on the next wave of actors rising to the occasion.