Financial Regulation

Why Does the CFPB Want To Protect Teens From Cryptocurrencies?

Rather than let students weigh crypto costs and benefits on their own, the Consumer Financial Protection Bureau claims to know best.

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For the past few years, the Consumer Financial Protection Bureau (CFPB) has published financial literacy activities for K-12 educators. These materials examine traditional personal finance subjects like loans, taxes, and saving habits. And as cryptocurrencies have become more popular, the CFPB has woven them into its educational roster, too—but only the parts that fit its agenda.

The resulting activity, "Wondering about virtual currencies," leans more toward advocacy than it does education. Apart from being self-serving (one reflection question asks students to "write a sentence describing why advisories such as this one are helpful to consumers"), it is overly critical of the current cryptocurrency space. 

Cartoonish cautionary tales figure heavily in the activity's source text, the CFPB's "Risks to consumers posed by virtual currencies" advisory. "Nicole" lost all her bitcoin after using a corrupt bitcoin exchange. "James" discarded his private keys and could no longer access his bitcoin holdings. "Kat" and "Larry" lost thousands when their hosted wallet companies wouldn't help recover stolen bitcoin. Other risks mentioned range from mildly annoying to truly awful. For all these downsides, there's little mention of the benefits of cryptocurrencies.

Plenty has changed since August 2014, when the advisory was last updated. Bitcoin is now trading at about $37,000 after hitting a record high above $63,000 this past April, compared to an August 2014 price of roughly $500. Ethereum, the second-largest cryptocurrency, did not exist when the CFPB released the advisory. In the last five years, its price has risen from $12.70 to $2,744.52. 

The classroom activity warns that few retailers accept virtual currencies as payment and implies that they aren't widely used. But these days, over 15,000 businesses accept bitcoin, and the currency is used in over 300,000 transactions daily. Some 46 million Americans17 percent of the adult population—now own bitcoin, according to a study conducted by the New York Digital Investment Group. That doesn't even account for the thousands of other cryptocurrencies. 

Still, theft and fraud are common risks according to the CFPB activity. It's true that cryptocurrencies are not legally protected the way government-backed assets are. But "theft of bitcoin from unsuspecting wallets has almost completely disappeared," according to Bitcoin Magazine. Just 0.002 percent of the bitcoin supply was stolen in 2020—a 92 percent drop from 2019. If those odds are still too high, cautious holders can keep virtual assets in "cold storage" wallets, which are offline and more secure.

Try as it might, the CFPB has not deterred investors. Crypto buyers either haven't seen the agency's warnings, or they have and simply don't care. Whichever is true, the CFPB's efforts to scare high school students away from crypto investments are misguided. Young people are already capitalizing on their curiosity: Nearly one in 10 American teenagers has traded crypto assets, according to financial services company Piper Sandler. Over a quarter of Gen Z and millennials prefer bitcoin over stocks as of 2019.

This activity's sole purpose is to "make [students] aware of the potential risks of investing in virtual currency," even though the agency's "Investigating investing" guide asks students to consider the benefits of various investment products in addition to the costs. To the CFPB, virtual currencies are the only asset class worthy of such high scrutiny. ("That's because [other asset classes] are insured by the federal government."

Lack of government involvement is often why people choose to invest in cryptocurrencies in the first place. In the face of rising inflation, they're hedges against a weakening U.S. dollar. Inflation also renders investment vehicles that the CFPB encourages students to considerlike government-backed bondsless lucrative. It shouldn't be any wonder that people are seeking nongovernmental solutions.

Besides, young people can benefit from cryptocurrencies. Some college students are footing their tuition bills thanks to their crypto investments. The CFPB should empower students to weigh costs and benefits on their own—a seemingly obvious component of the very financial literacy it aims to teach.

NEXT: Brickbat: The Eyes of Texas

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  1. IF only kids were taught some real financial information (or actual skills in general) that could be applied to real life.

  2. More regulation and bullshit advice.
    Fascists gotta fascist.

  3. The question is: Why does the CFPB still exist?

    1. Probably because some of us want a government bureau that can get shit done against unscrupulous and vulture corporations. Ever have an issue with a bank that they just absolutely refuse to resolve? Give the CFPB a call. That bank will change their tune really quick.

      The better question is- why is it always a reflexive “why does any of this exist” instead of looking at each institution and giving it a fair judgment whether it is an overall benefit or not?

      1. I don’t have issues with banks. I keep my finances in order.
        Don’t be a perpetual victim in need of a hero.

      2. You seriously think things are better since the creation of a federal Department of Education?

      3. Wake me up when they go after all the toxic food companies that are making our kids fat, dumb, and stupid.

        1. The progressives call that “the voter base”

        2. Ok, Tony.

      4. Probably because some of us want a government bureau that can get shit done against unscrupulous and vulture corporations.

        So, again, why does the CFPB exist – because it doesn’t do that.

        And no, simply calling them because of some issue with a bank won’t get the bank a visit from an enforcer.

        It’ll get you a nice form letter and then no action.

        Why?

        Because you have no money. You’re little people.

      5. The better question is- why is it always a reflexive “why does any of this exist” instead of looking at each institution and giving it a fair judgment whether it is an overall benefit or not?

        1. Because this is how you start that. First you ask ‘why does this exist?’ And then you look for an answer to the question you just formulated.

        2. Also because its not up to me to justify why they exist – they should be perpetually required to justify their own existence.

        Because if I have to even stop and ask that question then its not obvious that there’s an answer.

  4. If people could just make decisions on their own, then why would they need to pay for a bunch of government bureaus to do it for them?

  5. Yeah if only there was a way to counter the effects of large government intrusions into your lives. Yet last year many writers were pimping the very people who now are in power in DC and intend to increase their influence and budgets. And police cryptocurrency with the IRS. So liberaltarians got what they wanted and now are complaining about it.

  6. As a matter of habit I immediately discard the opinion of anyone who talks about the current price of a cryptocurrency. The value of currency is in its use as a store of value. If the price is constantly changing then it’s a poor store of value.

    Crypto is a joke and it will never be a serious alternative to currency. Its transaction costs are insane and its value is dominated overwhelmingly by speculators rather than people conducting business in it. Government has no business dishing out financial education to kids, but any serious financial education is perfectly right to tell kids not to go anywhere near crypto.

    1. Yes, it’s way better to hold dollars, which ALWAYS depreciate. Solid strategy.

      1. Fallacy of the false dichotomy…

    2. The value of currency is in its use as a store of value.

      No. The value of a currency is in its use to facilitate trade.

      If you want to store value you do no hold onto currency. Like, the current inflation rate is 4.2% – where do you think putting a bunch of dollars under a mattress will get you in 20 years? Or even just sitting in a saving’s account making 1.5%.

      In either case, the real value of your wad of cash is decreasing over time.

      If you want a long-term store of value, money is not where its at. You lend that shit out at above inflation rates. Or you buy land or gold or stocks or . . . beany babies are a better store of value than raw cash over time.

  7. Reason is really circling the drain. Why do we guard against unproven and extremely volatile currencies to teens? Maybe because we don’t want them to be broke before they come of age. Maybe because it’s just smart and advocating caution is far, far more sensible than saying “yeah, it’s perfectly fine.” Maybe because it’s true that they aren’t accepted at the vast majority of places. That right now they’re a speculative tool moreso than a currency, etc. etc.

    JFC, this rag is embarrassing.

    You guys put the dumb in “freedumb.”

    1. “Oh master government, tell me what to do”!

    2. they don’t want millionaire teenagers.

    3. Get up off of your damn knees, shitlunches.

    4. How do you become broke before you’re an adult?

      Children rarely have much in the way of money and most of its what is given by their parents – because people like you make it effectively impossible to get a job doing anything even in your late-teens.

  8. Don’t expect our government ever to give up control of the currency.

  9. A huge crash is coming among cryptocurrencies. If you doubt it, check out the underpinnings of Tether, a “stablecoin” run by extremely shady people in extremely shady ways, unaudited, 60 billion dollars worth having been created, possibly from thin air, and used to pump the price of crypto.

    Bitcoin is the first open source ponzi scheme. Anyone who “gets it” can participate. And a bit of musical chairs because whoever holds crypto when the crash comes will be unable to sell and see their holdings go to zero.

    Good times.

    1. Where do you get the idea that bitcoin is a Ponzi scheme? In what way?

      Sure, there’s a crash coming. Not because its a ponzi scheme.

      Because of a lack of confidence and the necessity to clear out all the no-hopers. Since its so easy to throw out a new ‘*-coin’ and everyone buys a bit to speculate. Just like tulips, at some point that shit is going to come crashing down.

      That doesn’t mean CC will be gone when it does.

    2. Agreed, it’s a scam.

  10. “Why Does the CFPB Want To Protect Teens From Cryptocurrencies?”

    Because they think that teens should be encouraged to spend their extra cash on beer and drugs instead of investing it?

    1. Gender change, General. Don’t forget gender change.

  11. Really, read your agreement with your wallet provider carefully.

    You know, like you read the end-user license agreements of all the software you use.

  12. And as cryptocurrencies have become more popular, the CFPB has woven them into its educational roster, too—but only the parts that fit its agenda.

    Until 13 year olds can no longer pay for their third trimester abortions without cryptocurrencies the CFPB will have failed its progressive constituents.

  13. a bureaucracy doesn’t want individual competition. film @11

  14. talks about the current price of a cryptocurrency. The value of currency is in its use as a store of value. If the price is constantly changing then it’s a poor store of value.

    Crypto is a joke and it will never be a serious alternative to currency. Its transaction costs are insane and its value is dominated overwhelmingly by speculators rather than people conducting business in it. Government has no business dishing out financial
    https://wapexclusive.com ,education to kids, but any serious financial education is perfectly right to tell kids not to go anywhere near crypto.

    1. It is in an infancy stage. I don’t see it as a currency but like an asset with a long term growth value. Like gold. Or a company stock.

      1. Gold has no long term growth value and neither do cryptocurrencies…

  15. “To the CFPB, virtual currencies are the only asset class worthy of such high scrutiny. (‘That’s because [other asset classes] are insured by the federal government.’)”

    No, other asset classes are not insured by the federal government. Stocks are not. Corporate bonds are not. Money market funds are not. Real estate is not. International stocks and bonds are not. This is misinformation.

  16. It’s tempting not to ever disabuse people of their fantastical notions around crypto, since you can get rich from suckers with money.

    But the only reason anyone has “invested” in crypto is as a speculative asset. Regulators have, if anything, waited too long to get a handle on a sticky situation.

    They have to regulate them out of existence. They simply have no choice. This is apart from the fact that when it is used as currency and not just a slot machine, it’s used to buy arms, drugs, and child slaves.

    Have you ever owned Bitcoin on the assumption that its price would stabilize and it would serve as a useful global currency? I think not. You wanted to get rich. Sell your fantasy stories to someone who is a bigger sucker than you.

    The sticky part is how you begin to regulate it while major financial institutions have it in their portfolios. You gonna warn them ahead of time and leave all the desperate random geeks holding the bag? This ends with the rich being richer and the sad nerds being sadder, that’s my fear.

    1. Gubmint gud! Personal choice and accountability baaaad!

      1. If you knew how the human brain works, you’d never utter the phrase “personal choice and accountability” again.

        And you might curl up in horror over the fact that we’ve subjected uncountable millions to torture as punishment for crimes they had no choice but to commit.

    2. So . . . how is any of this different than cash? Or gold and silver. Or simply trading any valuable good?

      The only reason they ‘have’ to regulate them out of existence is – the government doesn’t like competition. Only room for one organized crime syndicate in this town.

      1. Exactly. The only thing that makes a dollar different is the fact that you have to pay taxes in dollars, and taxes are levied by an entity with the world’s most powerful army under its control.

        And that’s it.

    3. Have you ever owned Bitcoin on the assumption that its price would stabilize and it would serve as a useful global currency?

      Have you ever owned any currency for this purpose?

      And only idiots think that dollars are a long-term investment. 4.2% rate of inflation – stick your dollars in a savings account and you’ll simply watch the value of your money decline.

      People who are investing are not holding dollars. They’re buying land, buying into businesses, even buying freaking specie.

      1. You’d have to be quite an idiot to consider dollars to be a smart investment. They are supposed to be relatively stable and decrease in value over time slowly. That’s what makes them a useful currency. Back them up with history’s greatest fighting force, and they’re pretty useful globally.

        What’s really funny is Americans holding crypto on the assumption that the dollar will fail, or something, as if without the United States armed forces (which is to say, the stability of the US government), crypto will be less than a fart on the wind. And your house will be only marginally worth more.

        The real big problem in this country right now is the Trump cult trying to turn the dollar into toilet paper. Stupidity is the most dangerous force in the world.

        1. You are all kinds of messed up.

  17. The students should be encouraged to predict the consequences when some highly publicized tax prosecutions (and property seizures, and incarcerations) demonstrate vividly that use of cryptocurrency is an ineffective method to avoid taxes, hide assets, or engage in criminal conduct.

  18. “Nicole” lost all her money after a corrupt government inflated the value of her savings away.

    “James” discarded his key and could no longer access his stash of cash.

    “Kat” and “Larry” lost thousands when their police wouldn’t help recover stolen cash.

    All sounds like exactly the same sort of problems you have with currency of any sort.

    1. I mean, do these people not get that *all* currency is ‘virtual’ – just that some use physical tokens and some don’t?

      1. The physicality of the tokens is irrelevant. They are all fantasies, stories we tell ourselves and agree upon (depending on the token).

        What distinguishes a physical dollar from a digital one is that the US Treasury sets actual fire to physical dollars when you pay them in taxes, whereas it just needs to hit “delete” on a keyboard when it destroys the virtual ones.

        1. US Treasury sets actual fire to physical dollars when you pay them in taxes,
          WTF?

          1. In ye colonial times, it was understood early on that government doesn’t raise taxes in order to generate revenue to do projects. That would be silly, since government creates the money in the first place. Instead it taxes to control the money supply, literally burning cash notes that were turned in as taxes.

            Taxes are not taken from you and then spent on a fighter jet. The spending has already happened before you paid your tax. Your money is taken and destroyed.

            This isn’t how a household budget works, because a household treats money as a commodity. But the government makes the money, so we’re dealing with a different thing: money is simply an accounting of debt.

            Debt is older than money, see. Money was invented to account for debts. And that’s fine, because when you’re born, you already owe a lot to the stuff government has done for you.

            If you think real hard you realize that the only reason anything happens is because of the threat of the IRS putting you in a cage.

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