Opinion: When Crypto's Tulipmania Meets The Real Economy

ndtv.com:

With the cryptocurrency world's luminaries having joined globetrotting elites at Davos — and punters swept up in the market crash suffering sleepless nights — it's time for regulators to reflect on the real-world impact of the next boom-and-bust crypto cycle.

Fintech and crypto apps have already expanded rapidly into digital cash, loans and complex products that can seem as simple as a credit card in e-mail form. That has created financial channels far beyond a one-way wager on Bitcoin or Bored Apes: Decentralized-finance (DeFi) platforms offer crypto yields of 8%-10% to investors; some then in turn fund startups around the world without touching banks. Tulipmania meets the real economy at WhatsApp speed.

In these times of market stress, rewards revealing themselves to be unsustainable have given way to a messy cascade of losses — highlighting the immense challenge facing policy makers, some of whom concede they've dropped the ball on crypto.

Crypto funds are currently being yanked from lending platforms, even those backed by real-world assets. One project offering 8% yields on tokenized debt issued by French payday lender Bling has been hit with “massive” redemptions in excess of its available cash and a credit line from venture-capital backers. For one investor I spoke to, that means potentially waiting months to get his money back. His main motivation for investing in the first place was free token rewards that have since evaporated.

Meanwhile, at the other end of the chain, lending  for the end-consumer has also hit a brick wall. Bling suspended its cash-advance service in April, as regulators cracked down on the sector. One consumer-advocacy group estimated the cost of Bling's instant one-month advance as equivalent to