Or think about Sarah, a single mom with two jobs, who is just starting to get comfortable with the concept of crypto. She’d listened to the siren songs of life-changing returns, a golden ticket to tee up her children’s future. She was irresistibly attracted to the idea of earning a 20% APY on a “stablecoin” and deposited her life savings. Instead, overnight, she watched in horror as it disappeared when the platform exposed itself as a lame-ass Ponzi scheme. Fast forward to thousands of these Sarahs, their financial dreams broken into pieces, having almost no recourse if any. This is the crypto future that Trump’s deregulatory crypto agenda is opening the door to.

CFPB: Crypto's Underappreciated Shield?

To the former, they paint the CFPB as a new bureaucratic roadblock, a killer of innovation. To truly understand the danger of its reduced role in crypto oversight, you need to understand what it actually does. The one goal of SEC enforcement is that the SEC’s enforcement doesn’t aim to note whether a crypto asset is a security. State agencies such as NYDFS and DFPI have more direct involvement in licensing and oversight of particular business practices within their own jurisdictions. The CFPB is currently the only federal agency with a sole focus on protecting consumers from exploitation by bad financial actors. This mission grew out of our own experiences during the 2008 financial crisis.

Think of it this way: the SEC is the cop who makes sure the bank isn't robbing itself. Think of the CFPB as that cop who looks in the window to make sure the bank isn’t robbing you. They handle individual complaints, investigate predatory lending practices disguised as "DeFi," and enforce fair lending laws – things the SEC simply isn't equipped or mandated to do. As someone who has covered blockchain for years, I have heard story after story of people defrauded by the Wild West of crypto. For most, the CFPB was their only light in the tunnel. Without it, who will answer Sarah's call?

Deregulation: A Trojan Horse Of Scams?

The argument for deregulation usually comes down to “less government, more innovation.” It's a seductive narrative, but in the Wild West of crypto, it's a dangerous fallacy. Deregulation isn’t a peddler for innovation— it’s codeword for deregulating a tsunami of scams and fraud.

  • Increased Scams: Without the CFPB's watchful eye, bad actors will thrive. Rug pulls, Ponzi schemes disguised as DeFi protocols, and outright theft will become rampant.
  • Reduced Adoption: Mainstream adoption hinges on trust. Who's going to invest their savings in a market riddled with scams and lacking basic consumer protections?
  • Race to the Bottom: Crypto companies, freed from regulatory constraints, will be incentivized to cut corners, engage in risky behavior, and prioritize profits over consumer safety.

The irony is stark: deregulation, intended to boost the crypto industry, will ultimately strangle it by eroding trust and scaring away potential investors. It's like removing the brakes from a race car – sure, it might go faster for a while, but it's only a matter of time before it crashes and burns.

Innovation or Just Financial Darwinism?

The idea that deregulation leads to innovation is especially infuriating. To be truly innovative, breakthrough ideas require a supportive ecosystem to thrive. It flourishes where regulations are transparent, even-handed and meant to ensure consumer safety. A truly innovative project should embrace consumer protection, as it enhances trust and encourages sustained development.

Those big, wizened companies love deregulation. Deregulation mainly helps out the large, established companies. They are able to cut through the fragmented regulatory thicket that paralyzes others. Meanwhile, the little guys – the small startups, the real innovators – have a hard time making it through. Instead they are met with crushing confusion and cut throat competition from the bigger players. It’s financial Darwinism at its worst, with only the most ruthless surviving, and consumers left as the collateral damage.

Look at the traditional finance world. Are we really making the case that to drive fintech innovation, banks should be unregulated? Of course not. We all know that consumer protection makes our financial markets work better and more efficiently. Crypto should be no different.

Warren Was Right, Again

Senator Elizabeth Warren’s scathing critique is spot on. She contends that this conscious deregulation destroys consumer protection and delivers far too much authority into the hands of private financial companies. This isn’t them trying to streamline government, this is putting corporate profits ahead of the financial health of everyday Americans. It’s a recipe for a return to the pre-2008 era of financial greed without limits, and we all know how that turned out.

The very truth that Congress would have to vote to disband CFPB is a testament to how vital this agency is.

Today, the Trump administration’s legacy is conveniently framed as the success story of a surprising champion for the “little guy.” This deregulation reveals the truth: it's a gift to powerful financial interests, disguised as a boost to innovation. It’s a disservice and a betrayal of the very people it purports to represent.

The Future Demands Vigilance, Not Complacency

The future of crypto oversight is uncertain. As the regulatory landscape continues to change, let’s make sure that we’re not calling for less regulatory clarity and consumer protection, but more. Instead of making the CFPB less powerful, Congress ought to give it more authority over crypto.

Let’s do it for Sarah and everyone else who is exposed to the dangers of unregulated crypto exchanges. They’re even more worthy of our attention and protection from predatory practices. Now more than ever, we need to stand up and insist that our elected officials put the interests of American consumers before corporate profits. We need to ensure that the crypto industry grows responsibly, ethically, and sustainably – not at the expense of ordinary Americans. The latter is a future where crypto equals scams, fraud, and financial disasters. And that’s a future none of us can afford.