[CGAP] Crypto Consumer Protection: Why ‘Wait and See’ Is No Longer an Option

By Laura Brix NewburyMehmet Kerse

What was once an edgy new market full of interesting, unfamiliar names – Bitcoin, Ethereum, Tether, non-fungible tokens (NFTs) – and promises of high financial returns has now become better known for its scandals and potential for large, unexpected losses. While the consequences for the leaders of disgraced crypto firms like Terra and FTX remain to be seen, the need to provide better protections for their customers is increasingly urgent, especially for those who are low-income and least able to weather losses from frauds, hacks, and market volatility.

Here, we've summarized an initial review of consumer risks faced by crypto users in emerging markets and developing economies (EMDEs) and the need to address these risks in financial consumer protection (FCP) frameworks. Due to limited research on the impact of crypto use on low-income consumers and few concrete measures taken by FCP regulators thus far, there are more questions than answers. We hope this blog will challenge the global FCP community and those interested in promoting a responsible digital finance ecosystem to move more decisively to protect vulnerable crypto consumers.

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