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Crypto is Money Without a Purpose

It isn’t a financial service and shouldn’t be regulated as one. Laws on gambling are more relevant.

By Todd H. Baker

Before FTX crashed, crypto lobbyists and many politicians were complaining loudly that crypto trading was being unfairly denied full participation in banking and finance by overly cautious regulators. We should thank our lucky stars that somebody showed good sense.

Granted, crypto trading looks a lot like the forms of finance we’re all familiar with. It’s made up of things called “exchanges,” “brokers,” “lenders,” “deposits” and “hedge funds.” The financial press breathlessly reports their every move. Crypto also carries the special mystique of the blockchain, which has let traders treat critics as anti-innovation Luddites.

Yet in the most crucial respect, the crypto marketplace isn’t at all like traditional finance. Finance and financial services exist for a purpose that crypto trading lacks. As a Nobel Prize-winning economist Robert Shiller once wrote, “Finance is not about making money per se . . .it exists to support other goals—those of society.”