Is crypto an opportunity or a threat?

passage of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act in July 2025, US lawmakers added to the sense that crypto is here to stay. But look beyond the hype and an uncomfortable issue remains unresolved: Are cryptocurrencies a genuine innovation capable of serving the common good, or a speculative threat to financial and social stability?Of course, not all cryptocurrencies are alike.

Unbacked ones, such as Bitcoin or Ethereum, have no underlying assets and derive their value purely from people’s belief that they have any. But backed cryptocurrencies, including stablecoins, attempt to anchor their value through holdings of real-world assets, such as dollars or short-term government bonds.Nonetheless, the same two questions apply to both categories: Are they viable? And, if so, do they benefit society? While humility requires that we not claim certainty about the answer to the first question, the second one must be met with a resounding no.

Crypto innovation undoubtedly has some valuable features—including blockchain-based applications, smart contracts, and decentralized finance—but the proliferation of private digital assets has also widened the gap between private and social interests.To be sure, the welfare implications of cryptocurrencies are more complex for dysfunctional countries where the state expropriates individuals or companies through financial repression or other means, or uses transaction data to oppress political opponents or minorities. In these cases, crypto technically can replace dollar banknotes and offer lower transaction and concealment costs.