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The Editors

The New Crypto Economy Could Use a Cop on the Beat

Bitcoin and its ilk were supposed to eliminate financial intermediaries. Instead, the middlemen are piling in — and creating a new sort of systemic risk.

This is not a Bitcoin.

This is not a Bitcoin.

Photographer: Edward Smith/Getty Images

There’s an irony in the rise of Bitcoin and other cryptocurrencies. They were supposed to usher in a new paradigm of finance, obviating the need to trust centralized institutions. Yet people are increasingly interacting with them through precisely such institutions. Hardly a week goes by without news of some financial intermediary — some well-known such as Fidelity or Goldman Sachs, others less so — delving into the largely unregulated realm, seeking to profit from the speculative fervor.

In principle, there’s nothing wrong with the entrepreneurial drive to give people what they want, even if what they want is to throw their savings away. That said, some defenses are urgently needed to protect the uninitiated and the broader economy from the consequences.