Robert Reich wrote this on his Substack a couple of days ago:
There's simply no legitimate use for crypto. Its only practical uses are tax evasion, money laundering, fraud, speculation, and crime.
I know some claim otherwise, but I hardly see avoiding regulation and transparency as justification for any financial transaction mechanism.
So, three questions.
First, why do we even permit crypto trading?
Second, why isn't this activity better regulated?
Third, why do we permit any crypto-related funds to go anywhere near politics?
Please read these observations in the context of my other article on cryptocurrency this morning.
And then please send answers on the back of a Bitcoin to the usual address.
And just to be clear, that last comment is a joke.
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If you regard it as a digital commodity, then people are allowed to trade other commidities where the price is set by the market. There is regulation, and one consequence is that some crypto companies do not operate in the UK.
There are clearly cryptocurrencies like Ripple which are used primarily for inter-company transactions, which provide a trustworthy, fast, verifiable means of doing transactions, and the difficulty of falsifying the blockchain is a key feature to why financial companies are interested in it.
Smart contracts provide the opportunity to create more sophisticated arrangements, with contracts increasing trust in a transaction through encoding the rules so neither side can cheat.
Some tokens are created to match specific currencies with audited holdings. Those are then used like foreign currency holdings – yes, there is a lot of ForEx speculation there, but companies can and do use this to cost-effectively manage foreign exchange rate change concerns.
Some companies have successfully raised funds through Initial Coin Offerings, giving themselves the ability to use crypto to manage effective ownership of parts of the company without stock trading fees, and this also supports those companies providing employee incentives while providing transparency about any divestiture by owners and can have contracts to prevent active dilution by majority holders.
Most fraud remains in the non-crypto financial system. There is fraud in the crypto system, but to declare it all speculation, gambling and criminality is just entirely false.
I can see no reason for any crypto.
If there is, the banking system has failed.
ICOs exist because of the relative difficulty of having liquidity in traditional shares. Stablecoins exist partially to reduce the costs and price gouging of ForEx. Some smart contracts exist to replicate concepts only accessible to high net worth individuals through wealth and investment management companies, making some options available to a wider market of investor.
On the latter you can definitely debate whether this is safe, or whether there is a significant risk of investors incurring more risk than they can afford.
However, there is also a question of traceability. With Collateralised Debt Obligations, for example, it was hard to identify who was actually carrying the losses from a widespread downturn increasing mortgage default rates significantly. If CDOs were represented in Smart Contracts then the losses could be fully traced via the blockchain, so the uncertainty that paralysed the whole financial system would have been lower.
I’ve also seen company failure from an inability to trace a source of funds before, for example, a property is frozen and a securitised loan is not just defaulted on but the underlying asset unavailable to get repayment. More traceable money (via companies like Elliptic and Chainalysis) allow better Know Your Client and Know Your Transaction analysis before money moves, tracing not just the immediate source of money but the flows to that account, to reduce the risk of a legitimate company accidentally being burned by dealing with a sanctioned or proscribed entity.
There are places where the financial system already fails. Crypto isn’t the only solution, but it at least offers some ideas and possible solutions.
I go back to my quote from Robert Reich today.
Trust, transparency and universality – the essential ingredients of a governable society.
Crypto gives us suspicion, opacity and exceptionalism and propels us towards managed obfuscation and coercive “stability”. AI will accelerate this descent as society fractures into the manipulators, the manipulated and the feral.
I find it remarkable that the licensed money creation channel of the state can be used to provide borrowers with funds that can be used to purchase crypto, the new “bearer bond” for those who believe that there is no such thing as society only the well being of the individual and his family.
The law and accounting and audit are running way behind the reality that AI/crypto is constructing.
Looking at this report
https://www.theguardian.com/news/ng-interactive/2026/aug/25/other-post-office-scandal-organised-crime-launders-money-high-street
It seems to me that the UK and possibly other Governments have given up on crime
£17 billion of unpaid corporation tax by smaller companies a year – or 40% or more of the total – proves they have
To take a topical example, do a search on “Rupert Lowe” (his full name is Rupert James Graham Lowe”) in Companies House (his DOB is 31/10/57).
https://find-and-update.company-information.service.gov.uk/search?q=Rupert+Lowe
It’s a totally confusing mess. CH don’t care – GOV.UK don’t care, the accuracy of CH documents on view to the public, isn’t their problem. The CH public record has been a dog’s breakfast for decades.
Yet being able to check Mr. Lowe’s past and present, allegedly legitimate business activities has never been more relevant than it is now.
Agreed
But my own redord is a mess – and I have no idea why
If money in my bank account is the bank’s liability, as explained, what happens when I withdraw it? The bank’s liability to me is dissolved and now I am holding cash. Whose liability is the cash? I know the answer is the government, but in what sense? When the money I possess is the bank’s liability the bank has to do something for me (provide cash, or a transaction) when I demand it. When the money I possess is cash, what does this oblige the government to do?
Cash is the Bank of England’s liability. It is printed on it.
How is it settled? By accepting the cash in payment of tax.
It’s really not hard.
I see one small, legitimate potential use for crypto. To avoid excessive charges for foreign workers sending remittances home, or as a means of supporting people in countries under international sanctions or where legitimate governance has broken down (Cuba, Afghanistan).
I think you could argue that those specific examples are really failures in the system elsewhere, but it may be of genuine assistance in some small number of cases.
I do ultimately agree with Robert Reich though. I don’t think such limited use cases justifies the continued existence of something designed almost entirely to shield holders from legitimate oversight.
As for your three questions, of course we know the answer. Politicians and regulators are captured by the wealthy elites who see some potential use for crypto as a means to avoiding taxes and scrutiny.
The irony is that with all crypto transactions permanently recorded, all you need to do is identify the corresponding wallets to have irrefutable evidence of a transaction. No such receipts exist when cash is used. For people making illicit transactions, this is actually a real potential liability of the system.