Crypto Scams Growing Says Key Bank Regulator

Crypto scams are growing, the Acting Comptroller of the Currency Michael Hsu said in a speech to the Financial Literacy and Education Commission this week.

There is an urgent need for improved crypto literacy and education with the rise, Hsu told the consortium of federal financial regulators.

Crypto is not going away, the OCC leader said at the gathering.

He pointed out crypto theft hit $3.2 billion in 2021, a 516 percent increase over 2020 with the biggest threat coming from so-called rug pulls, where legitimate-looking crypto projects were used to attract then steal $2.8 billion.

“Scammers pose the greatest risk, defrauding people using romance ploys, blackmail scams, and high-profile hacking schemes,” Hsu explained.

One of the problems for consumers with crypto, said the OCC chief, it is hard to find neutral, trusted sources of information on the asset class.

“Consumers are left with an information landscape dominated by a lot of hype, jargon, attractive yields, and only boilerplate disclaimers about the risks they could face,” he asserted.

With one in five adults now having exposure to crypto – as many as have exposure to fixed income investments, Hsu said there is a need to move quickly to improve the crypto literacy of consumers.

According to the Acting Comptroller, the crypto-owning population is younger, more financially vulnerable, and more diverse than the general population with70 percent born after 1980 and 56 percent earning under $50,000.

The greater diversity for crypto owners compared to a large portion of the general public is also shown that Asian, Black and Hispanic adults are more likely than White adults to say they have ever invested in, traded, or used a cryptocurrency.

Additionally, nearly four times as many underbanked consumers own cryptocurrency compared to the fully banked who have it (37 percent versus 10 percent).

“(Crypto owners) seem driven by the hope of capturing more of the upside; fear of missing out on the next rally; the belief in the promise of democratizing finance; and embrace of a new technology and community. These powerful drivers have strong emotional appeal,” Hsu contended.

Source: Forbes