Last November, the global cryptocurrency market was worth $3 trillion. Now, it’s below $1 trillion. Bitcoin alone has plummeted more than 70 percent since November 9.
Many Americans have lost their shirts. So why isn’t crypto regulated like other financial assets?
First, some history.
Eighty nine years ago, the Banking Act of 1933, also known as the Glass-Steagall Act, was signed into law by Franklin D. Roosevelt. It separated commercial banking from investment banking—Main Street from Wall Street—to protect people who entrusted their savings to commercial banks from having their money gambled away. Glass-Steagall’s larger purpose was to put an end to the giant Ponzi scheme that had overtaken the American economy in the 1920s and led to the Great Crash of 1929.
Americans had been getting rich by speculating on shares of stock and various sorts of exotica (roughly analogous to crypto). As other investors followed them into these risky assets, their values increased. But at some point, Ponzi schemes topple under their own weight. When the toppling occurred in 1929, it plunged the nation and the world into a Great Depression. The Glass-Steagall Act was a means of restoring stability.
It takes a full generation to forget a financial trauma and allow the forces that caused it to repeat their havoc.
