Crypto currencies are the crack cocaine of the financial world. Get rich quick schemes which, like Pyramid scams, needs a constant supply of suckers to prop them up. Now they want the Fed to buy in.
The Republican Party have officially become strong supporters of cryptocurrency, which might have something to do with the $245 million donated by the cryptocurrency sector. Cryptocurrency appeals to the sort of high risk speculative investors that have been responsible for various financial disasters. They are imbued with a sense of superiority that is wholly unwarranted.
The grandfather of all cryptocurrencies is Bitcoin, which does not offer the anonymity that is supposed to be part of the appeal of cryptocurrencies and has an unstable value.
Responsible financial advisors always stay clear of cryptocurrency. There are many issues with this form of currency which Investopedia have outlined.
The incoming Trump administration has a number of crypto zealots in their number including Cynthia Lummis (R-WY) who has introduced a bill that will essentially require the Federal Reserve to underwrite crypto currency. The Bill will require the U.S. Treasury to buy one million Bitcoins over five years and to hold them for at least 20 years. Given the number of crypto zealots in the Republican party there are likely to be more similar measures.
Every tax paying US citizen is going to become a willing participant in a high risk gambling scheme. They will be told that it is a get rich quick scheme, but won’t be told that the people getting rich is the executives.
A detailed analysis is provided in an article by Michael Luciano based on an piece by Chris Hayes for MSNBC