Cornell Professor Warns of Growing Crypto Risks Amid False Promises and Hype
A professor at the Dyson School at Cornell University, Eswar Prasad, has raised concerns about the growing risks in the cryptocurrency market, citing regulatory gaps and centralization as key issues. “If anything, cryptocurrencies today pose even greater risks to investors and our financial institutions than they did in the past,” he said.
Cornell Professor's Crypto Warning
Eswar Prasad, a professor at the Dyson School at Cornell University and a senior fellow at the Brookings Institution, expressed significant concerns about the risks posed by the burgeoning cryptocurrency market in an op-ed published by The New York Times on Friday.
Despite bitcoin’s recent surge to record highs and growing political support from figures like former US President Donald Trump and current Vice President Kamala Harris, Prasad warned:
In fact, cryptocurrencies today pose even greater risks to our investors and financial institutions than they did in the past.
He noted that the loosening of regulations by the US Securities and Exchange Commission (SEC) has made it easier for retail investors to enter the cryptocurrency market, often without fully understanding the risks involved.
Prasad went on to highlight the dangers of centralization in the crypto ecosystem, pointing to the collapse of FTX and the regulatory troubles surrounding Binance as examples of how centralized power can undermine the fundamentals of decentralized finance. He also stressed that “risks can spill over from decentralized finance to traditional finance, as well as vice versa,” creating vulnerabilities across the entire financial system.
Professor Cornell argues that while decentralized finance has the potential to improve financial access and efficiency, it also “carries the weaknesses of traditional finance, but with less regulation and many new risks.” He advises:
While being open to innovations that improve access and efficiency in financial markets, users, investors and regulators need to be wary of false promises and hype, especially if that hype comes from politicians.
Do you agree with Cornell Professor Eswar Prasad? Let us know in the comments below.
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