Although the cryptocurrency market has grown and become more popular over the past decade, many remain skeptical of crypto assets, including economist Paul Krugman.

Paul Krugman has criticized cryptocurrencies for years, calling them “the new subprime.” However, he also said that while the industry presents itself as cutting-edge and respectable, it has not yet developed products for the benefit of the real economy.

Recently, Krugman said the cryptocurrency market has evolved into a “postmodern pyramid scheme,” adding that the collapse experienced by investors this year could open the door to federal regulation.

“The way I see it, crypto evolved into a sort of postmodern pyramid scheme,” wrote Krugman. “The industry lured investors in with a combination of technobabble and libertarian derp; it used some of that cash flow to buy the illusion of respectability, which brought in even more investors.”

“And for a while, even as the risks multiplied, it became, in effect, too big to regulate,” he added. 

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Paul Krugman’s comments follow the collapse of stablecoin Terra and sister token Luna in May, which led to a violent collapse by crypto companies that either suspended customer payments or filed for bankruptcy.

Overall, the crypto market capitalization has fallen to less than $900 billion, a significant drop from its peak of $3 trillion in November 2021.

The notable investor also referenced Fed Vice Chairman Lael Brainard’s speech last week. He (Brainard) said the crypto selloff addressed “serious vulnerabilities in the crypto financial system” as the prospect of a decentralized currency was boosting the troubled crypto Raum by creating fertile ground for fraud and money laundering, among other financial crimes.

As cryptocurrency became more mainstream, other companies began to adapt – payment apps like Venmo and Cash App began to facilitate digital currency transactions.

Meanwhile, institutions like Princeton, Harvard, and MIT have started offering courses to help people navigate blockchain. “Why are these mainstream institutions and people lending cover to what as Brainard made clear, a highly dubious industry?” Krugmann asked.

Either way, Paul Krugman thinks the 2022 crypto crashes could present a regulatory opportunity.

The federal government took action when President Joe Biden signed an executive order on cryptocurrencies in March to unify government control. A legislative proposal to create a legal framework was presented in June.

Although Brainard’s speech acknowledged that cryptocurrency is still a growing space, it did not pose a potential threat to the existing financial system. As such, he believes now is the time to regulate the industry.

Krugman echoed his sentiments, writing, “That’s very good advice. I hope the Fed and other policymakers take it.”

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Despite the volatility of the cryptocurrency market, many enthusiasts (especially Black enthusiasts) believe it can become an alternative financial system.

History has shown that people of color are always underfunded and discriminated against by traditional financial institutions. Research from the Federal Deposit Insurance Corporation supports this argument by reporting that low-income Black and Hispanic families have minimal access to the bank.

The Federal Reserve reports that 40% of Black Americans have or do not have a bank, 13% do not have a bank, while 27% are dependent on other financial services.

OneUnited Bank president, COO and owner Terri Williams shared that “banking while Black” is a term used to describe discriminatory banking practices. 

“There are many reasons for the large percentage of unbanked or underbanked Black Americans, including lower median income and education, less access to banking services due to a lower concentration of bank branches and a higher concentration of check cashers in Black communities, and systemic racism,” she shared.

Read also: Central African Republic President Voices Support for Cryptocurrency to Become a Local Currency

Although there are Black-owned banks, many still struggle to obtain adequate investment financing and do not have access to the same resources as the big banks.

Olayinka Odeniran, the founder of the Black Women Blockchain Council, says cryptocurrency has become a space where communities of color can support each other and connect without worrying about the bureaucracy of financial systems.

“Everybody always felt that we don’t really care about investing or budgeting,” said Odeniran. “But in essence, we do. It’s just that historically, we have not had resources that allow us to tap in beyond risk, gaining some monetary freedom that’s beyond paycheck to paycheck.”

Despite recent crashes, many still believe cryptocurrency is a better alternative.

The Pew Research Center reports that Blacks, Hispanics and Asians are more likely to say they have been involved in cryptocurrency.

Cleve Mesidor, executive director of the Blockchain Foundation, revealed that people of color use cryptocurrencies as “an alternative financial system to operate” without suffering the typical discrimination of banks.

“People of color sometimes have difficulty going to get a bank loan or going to get some sort of assistance from the government or a way to start their business and they’re turned down,” crypto enthusiast Steven Bumbera shared. “Crypto doesn’t care.”

Other cryptocurrency enthusiasts share that the benefits of managing money with blockchain technology outweigh the risks. Crypto loans allow borrowers to get money from a currency exchange or credit bureau without having to face racial discrimination.

“If you are on chain, and you have a wallet address, you’re a wallet address – that’s it,” said Bumbera. “Crypto doesn’t care about color, race, sexual orientation.”

Enthusiasts believe that crypto can be used to directly fund businesses and organizations without penalizing certain third-party donations when transferring money.

As more people of color enter the market, Terri Williams warns that the new financial limits also come with risks and challenges.

“Crypto is not a competitor to traditional banking, but a complement,” she said. “There will continue to be a need for traditional banking services, but crypto, in moderation, can provide opportunities for wealth building and opportunities to develop new services – such as remittance services – that can better meet the needs of the Black community.”

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The Central African Republic has been making moves to integrate cryptocurrency into its economy. This week, the country’s president announced that his administration plans on embracing digital currencies.

Last month, the Central African Republic announced that it will be following El Salvador’s example and adopting Bitcoin as a legal tender for use in regular commerce. This decision should help promote economic growth.

The decision to introduce a new currency has been widely criticized by many people while others praised it. Regardless of the opinions, the government believes that it could secure an independent financial future for the country.

Read also: Lawsuit Does Little to Faze Musk From Supporting Dogecoin

Meanwhile, President Faustin-Archange Touadéra has announced that he will launch a major crypto initiative called “Sango Project.”

With their plethora of plans, the Sango Project is designed to attract global crypto businesses and enthusiasts.

The project seeks to pave the way for a digital future of endless possibilities, combining Bitcoin initiatives with Non-Fungible Tokens (NFTs) and metaverse pilots.

With the recent announcements of Sango’s launch and plans for crypto-based investment in CAR, it is clear that this country wants to become a leading hub for investors.

The President has been clear about his commitment to cryptocurrency on Twitter.

“With #Bitcoin as #legaltender & inspiration, our country opens a new chapter in its inspiring journey towards a brighter future via #blockchain #tech,” he wrote. “Everyone is welcome to witness the Sango Genesis Event that will be broadcast on the 3rd of July, on sango.org.”

The President later shared a press release about the “tokenizations” of the country’s natural resources. He also said that this conference will be revolutionary for blockchain technology and Web3.

Sango plans to create a crypto island within the metaverse. This will be an economic zone where virtual properties can have special status and thrive.

President Touadéra defended the decision to legalize Bitcoin as an official currency, telling people online that understanding its disruptive power is crucial.

The World Bank has disapproved of any regulation or acceptance as a legal tender for Bitcoin. They state that they will not be supporting Sango’s venture with these cryptocurrencies.

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Elon Musk’s consistent support for the Dogecoin and Shiba Inu cryptocurrencies mean that they’ve experienced a sudden increase in popularity. Although he himself is facing lawsuits over it, the momentum seems to be back again with more people investing and trading them recently.

Since last month’s crypto market crash, many of the most beloved coins have seen significant drops. Finally, other coins like Shiba Inu and Dogecoin have started making an uptrend with a slow climb up on their prices chart.

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Though Musk is known for tweeting about various cryptocurrencies through the years, his messages have managed to impact their prices.

Shiba Inu’s price has been influenced by the words of the SpaceX CEO, which helped it survive through crypto decline. His most recent influence came after he wrote that he would still support Dogecoin despite a pending lawsuit, resulting in a surge just like many other coins.

It’s not hard to see why Musk’s support for these two Shiba Inu coins has been influential in raising their values.

In a recent interview with Bloomberg, Elon Musk cleaned up some misunderstandings surrounding his lawsuits.

A lawsuit has been filed against Musk and his companies for their involvement with a scheme surrounding the Dogecoin cryptocurrency.

Keith Johnson has accused Musk of being part in a large-scale pyramid scheme that controls Dogecoin prices and convincing others to invest their money into cryptocurrency.

Johnson is seeking compensation for his losses due to Musk’s actions. He claims that the SpaceX CEO told others about investing in cryptocurrency, which caused him significant financial damages. But Musk maintains he never urged anyone to invest.

“I intend to personally support Dogecoin because I just know a lot of people who are not that wealthy who have encouraged me to buy and support Dogecoin,” Musk explained. “So I’m responding to those people.”

Elon Musk’s support for Dogecoin can be traced to his employees asking him to do so.

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