It would be a stretch to call politics productive, but I’m always hopeful politicians are well-intended. We need well-intended politicians to keep finance consumers safe when saving, borrowing, and investing. Finance is already confusing for millions of people, and crypto just adds to this despite billions in super slick marketing telling us how easy it is.
When consumer financial regulation was being modernized in the post-2008 crisis years, Elizabeth Warren led the charge. She pushed so hard painting financial firms as being against the people that she wasn’t picked to lead lead the Consumer Financial Protection Bureau she gave rise to.
But one of her key selling messages did make sense: the CFPB — and all financial regulators — is like a cop on the beat.
I’ve long felt the “cop on the beat” analogy works for financial regulation. There are lots of rules to follow, and it sends a clear signal that someone is watching to make sure finance firms follow these rules.
A huge part of the beat cop playbook is staying visible, and Warren remains extremely visible casting financial firms — crypto firms included — as the villains.
This takes the beat cop playbook too far. At worst, it’s pandering and unproductive to the financial endgames of American consumers.
Warren is especially vocal about crypto in this market moment, and I do believe she’s well-intended wanting to protect consumers.
And perhaps that’s what the beat cop playbook is all about: sounding scary enough to keep the financial firms focused on consumer interests over their own.
But the side effect of scaring financial firms is scaring consumers. And scaring consumers risks closing them off to being educated about inevitable market evolution.
Financial firms do indeed have billions in marketing dollars, and crypto firms are the banks of tomorrow. So politicians and regulators must figure out how to combine these forces into productive ways of serving consumers.
I’ll come back and build out this last point later.
In the meantime, Coindesk’s David Morris has some good notes on this topic in the link below.
Comment below or hit me with questions.