Rarely has a crisis been so well timed: Crypto managed to boom and crash before it became too connected to the broader financial system. The damage has been limited mostly to those who, despite ample warning, chose to get involved. There’s no need for emergency intervention. On the contrary, the bubble’s deflation, while it lasts, affords regulators and investors a unique opportunity to reflect and act on the lessons learned.
So what are those lessons? A few come to mind.
Crypto is not an asset class. Stocks and bonds have cash flows. Commodities have industrial uses. Digital tokens have nothing but sentiment. Someday, they might prove useful as representations of assets, making transactions cheaper and more reliable. As things stand, buying them is pure speculation, not investment. They’re worth no more than you’re willing to lose, and certainly have no place in pension funds or retirement accounts….
‘Enforcement 40’ for 2020
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