Congressman Compares Crypto to Ponzi Scheme and Pet Rocks | Fears Undermining US Dollar

The battle for control of crypto in the United States isn’t sitting on the back burner. Congressman Sherman is about as vocal as it gets and he isn’t lobbying for it.

US Dollar 

Rep. Brad Sherman’s views on cryptocurrencies set him apart from most of his colleagues in Congress. The Northridge-area Democrat isn’t just wary of crypto: He hates it and views it as a threat to the national security of the United States.

Sherman, who chairs a House subcommittee on investor protection, may be the leading crypto skeptic on Capitol Hill.

“I don’t think we’re going to get [to a ban] anytime soon,” Sherman told The Times, noting that the crypto industry is a powerful player when it comes to campaign donations. “Money for lobbying and money for campaign contributions works, or people wouldn’t do it; and that’s why we haven’t banned crypto. We didn’t ban it at the beginning because we didn’t realize it was important, and we didn’t ban it now because there’s too much money and power behind it.”

Like most crypto critics, Sherman worries about individual investors being defrauded. But Sherman also worries that crypto poses a more systemic threat, enabling criminals and human-rights abusers and undermining the dominance of the U.S. dollar. Crypto advocates counter that the same technology can help persecuted people get their money out of authoritarian countries.

Ponzi Scheme

In a new CNBC interview, Representative Brad Sherman of Southern California says now is not the time to ban crypto but highlights that he sees a scenario where the government could crack down on the nascent asset class.

“Crypto is not a new asset class. Charles Ponzi developed this asset class well over a century ago. I think that if crypto loses some of the money and power that’s behind it that we will have an opportunity to regain that control.”

Sherman notes that crypto has one distinct advantage over the US dollar as a currency and that advantage would disappear once clear know-your-customer and anti-money laundering rules come into play.

“Once those laws are clear, crypto loses the one thing it aspires to be and that it successfully competes with the dollar by having an advantage over the dollar, and it has only one advantage. It is well suited for the tax evaders, the bankruptcy fraud [and] the family court fraud that can best be done if you avoid your know-your-customer laws. If we can impose those laws on crypto, then people who are investing because they think it is going to be a successful new currency will realize it has no currency advantage over the dollar.

At that point, it just becomes another non-fungible token. It becomes the Pet Rock of the 21st century.”

Earlier this month, Sherman said he was worried about investor protection, noting that it’s difficult to stop people from spending money the way they want to spend it.

“It is hard to be running the subcommittee dedicated to investor protection in a country in which people want to wager on [meme coins]. Cryptocurrency is a meme you invest in, in the hopes that you can sell it to somebody else before it tanks. That’s the nice thing about a Ponzi scheme.”