Ban crypto and its parasitic thievery before it is too late

Only the lucky or well-informed few manage to get out at the top. One such was Elon Musk’s former business partner, Peter Thiel, whose venture capital fund sold out just before the crash last year at a reported profit of £1.8bn even as he was still preaching the merits of crypto and ridiculously proclaiming “the end of the fiat money regime”.

Thiel’s Palantir Technologies is meanwhile bidding for a £480m NHS data contract – nothing to do with crypto, of course, but there’s another sheep there for the fleecing, it might be thought.

In any case, there is a marked reluctance among Western governments and regulators to see crypto as just a sophisticated scam, and like China, ban it entirely.

That’s what central banks should be doing, but they hesitate. Instead, they remain faintly in awe, preferring to see the wild west of crypto as a systemically irrelevant distraction rather than the parasitic thievery it really is.

Rishi Sunak, the Prime Minister, still hopes to make Britain a digital currency superpower, and has ordered the Bank of England to respond accordingly. Is this entirely wise? Others are apparently chasing hard. Such luminaries of the global financial landscape as El Salvador and the Central African Republic have even adopted Bitcoin as legal tender. Snooze and you lose.

Crypto is admittedly a little bit different from tulips and other basically imaginary “assets” that have tended to fire past manias. Instead, it poses as an alternative to fiat currencies, and a more trustworthy one at that, as theoretically, the amount of coin in issue is in most cases strictly finite and therefore cannot be devalued.

Nothing wrong with private currencies as such, but unfortunately, crypto is not what it pretends to be, and never will be; there is no other “asset class” I can think of which is quite as volatile as Bitcoin, prone as it often is to movements of as much as 10pc in a single day. This in turn renders it virtually worthless as a means of payment.

The emergence of so-called stablecoins such as Tether – crypto which is supposedly backed by fiat currency reserves – has so far failed to close the credibility gap. In most cases, reserve backing is, shall we say, somewhat non-transparent, and almost certainly wouldn’t cover withdrawals if everyone decided to cash in at the same time.