As Molly White, a prominent blockchain and cryptocurrency critic, points out in her recent Bloomberg article, the crypto market has once again entered a period of speculative mania after more than a year of a deep crypto winter. Bitcoin prices have surged, venture capital firms are investing in cryptocurrency startups, and the infamous crypto bros are back, mocking skeptics with their “have fun staying poor” mantra. However, as White astutely observes, this resurgence comes with a veneer of normalcy and a reputational makeover that may not reflect the true nature of the industry.

According to White, the crypto market remains fraught with manipulation and scams despite the new spokespeople in suits focusing on regulatory compliance and the traditional financial institutions pitching cryptocurrencies as a way to diversify portfolios. The approval of spot Bitcoin exchange-traded products (ETPs) by the US Securities and Exchange Commission (SEC) has been seen as a watershed moment by crypto advocates, but as White points out, even SEC Chair Gary Gensler has reiterated that Bitcoin is primarily a speculative and volatile asset with ties to illicit activities.

White’s article alleges that there is still rampant market manipulation on crypto exchanges, with wash trading being a built-in feature and a relatively small number of large holders artificially propping up prices. Despite the industry’s push to present crypto as a legitimate new asset class, White argues that greater reforms and more stringent enforcement are necessary to protect investors.

One of the key points White makes is that crypto relies heavily on storytelling, as the underlying technology lacks practical applications for the average person’s daily life. The narratives surrounding crypto have shifted over the years, from Bitcoin being pitched as a stable alternative to traditional banking to the “web3” buzzword of the last crypto boom. Now, as White observes, the industry is latching onto the AI trend, with startups promising to use blockchains alongside AI models to address various issues despite blockchain systems’ inherent inefficiencies and limitations.

White also calls attention to the concerning trend of AI pioneers like OpenAI CEO Sam Altman also being involved in blockchain projects, such as the Worldcoin token, which has drawn the ire of data privacy agencies in multiple countries. The world of AI-blockchain hybrids, as White points out, remains light on products and heavy on speculation, much like the worst offenders of the web3 era.

As the specter of a new crypto mania looms, White argues that it is far past time to consider new solutions to the familiar downside. She says the industry’s scammers must no longer be allowed to exploit everyday people drawn in by promises of revolutionary technology. White acknowledges the concerns of some crypto skeptics who worry that regulation may leave loopholes for exploitation while legitimizing crypto, but she asserts that the past decade of regulators largely ignoring the industry has not worked.

White concludes by emphasizing the need for thoughtful, carefully crafted regulation to protect investors and limit the contagion any future crypto disasters can transmit to the rest of the financial world. She also calls upon industry leaders to hold one another accountable and support models of government regulation that require rigorous outside scrutiny.

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