Paul & CZ In-Conversation: Crypto Consumer Protection

Wrapping up their debate, Professor Paul Krugman and CZ scrutinize the consumer market for crypto and blockchains and their visions for the technology’s future.

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Topics include: What's Next for Crypto? • Paul’s Reflection on Discussion


[MUSIC PLAYING] - I'm going to wear my economist hat for just a second here and say, look, for some of us who are of a certain age, the 2008 financial crisis is still very alive. And what we remember is that there were a lot of sophisticated seeming things-- subprime backed securities that, supposedly, through elaborate algorithms were supposed to be safe; subprime mortgages that were supposed to be safe; alternatives to bank accounts, repo, that were supposed to be safe, all of which ended up being disastrous in many cases for exactly the people who were least prepared to take on the risks. Now we have another set of stuff that is complicated, hard to explain. Who is protecting the consumer in all of this? - Who protects the consumers? I think that's a really, really good question. I think it's a responsibility that should be shared by industry players, regulators, law enforcement, and also educational institutions. So we need to educate people like now with this content, more people can learn about financial risk, how to manage that, learn about stablecoin. Our schools don't produce financially literate people. You can graduate from high school, even university. You can be financially relatively illiterate. Many of them don't even understand what a mortgage-backed security is or a collateral mortgage-backed security even. Most of the people couldn't define those terms. So from the educational institutions to industry players to regulators to law enforcement, we all need to share the responsibility. - OK. I'm going to give you a cynical take. I think that thinking that financial literacy is going to solve this problem is a little bit of a vain hope. It's just demanding too much of people. What is interesting is after 2008 and all of those disasters, and we responded not with education. We responded with regulation. We responded with Dodd-Frank, with stuff that basically tried to bring more of the financial system under the umbrella of prudential regulations. And all indications are that it worked. So wouldn't the lesson from all of that be that the answer here is not so much to expect high school students to come out able to understand all of the stuff that you're telling me about and more about just saying, hey, the regulatory framework has to be expanded to cover a wider range of institutions, a wider range of products? - I think there's an argument both ways. There's not really a right or wrong here per se. It's not black and white. I think from a regulatory perspective, it is important for regulations to continue to evolve with new technologies, new industries to protect consumers. I think that is needed. At the same time, I do think people need to learn how to protect themselves. We can't just have people completely vulnerable, overly protected, and they don't understand the financials, et cetera. I think that doesn't-- I personally think that, in most countries, the financial literacy, even in developed...

About the Instructor

Since Bitcoin’s launch in 2009, crypto has offered the hope of a stronger, more democratic financial system. And it’s raised plenty of questions as it continues to evolve. Now experts and skeptics at the center of the conversation are sharing a straightforward look at how this ecosystem is changing. Learn the basics, dive deep into the world of blockchain and Web3, and get the breakdown on what you need to know now.

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Chris Dixon, Changpeng “CZ” Zhao, Emilie Choi, and Paul Krugman

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