Beware Those Who Continue to Bash Crypto

Digital assets are mainstream, but a few persist in citing false claims

It's Monday, August 12th. The crypto wars are over, and crypto has won, and I've got three examples of this to explain why that's true and why it is so important for me to be talking about this with you today.

Because those who've been following the story of crypto over the past decade, those who have been paying attention to this podcast and our webinars and our conferences where we emphasize this new asset class: the first new asset class in 170 years. The last time we had a new asset class was the discovery of oil in the 1850s. The notion of bitcoin, blockchain technology, digital assets is revolutionary. This is as significant to the global economy as the invention of the internet was back in the 90s. 

There has been a raging debate over the past decade over whether this is legitimate, whether this is worthwhile, whether it's going to be sustained, whether it will survive and thrive. The debate is now over. There is no question that the answer is, “yes.” That this technology has legitimacy, that it has revolutionary benefits for global commerce, and that it has entered the mainstream.

And the evidence though, that I'm going to cite for you, I said I have three pieces of it. I'm going to share them with you today. The reason I'm citing this, the reason I'm talking about what seems to be obvious to everybody is that there remain a very small pocket of crypto-haters who have been blasting and complaining and ridiculing and decrying the development of this technology for the past decade. And while they might have had some legitimate basis 15 years ago to wonder whether this innovation was a good thing or not, they persist in continuing to have that attitude, and it's perplexing. Worse—it's not just perplexing, it's now bordering on dangerous because of the misleading and flat-out incorrect statements that these folks are making. 

First evidence: John Reed Stark. John Reed Stark used to be the head of internet enforcement for the SEC, and he left that job back in 2009.

Anyway, John Reed Stark clearly hates bitcoin. He has written negatively about it ever since bitcoin was invented, and he has lamented the fact that it has not yet gone away and disappeared. Well, last week, John Reed Stark posted a diatribe on X. And here's what he wrote (and the voice you're about to hear is not John Reed Stark's; it is AI, not him): 

“…bitcoin’s not good for much of anything except giving people who have money to burn a novel way to set it on fire.” (From @JohnReedStark on X.com)

Why did John Reed Stark say that? Well, Morgan Stanley had just announced that they are now letting their financial advisors recommend the bitcoin ETFs to their clients, and John Reed Stark isn't happy about it. So, he wrote this long post on X, and here's an excerpt of what he said: 

“In my humble opinion, any of the 15,000 Morgan Stanley investment advisors who are also Certified Financial Planners may lose their CFP credential quickly…. This is also an extraordinary personal risk for some of Morgan Stanley’s advisors themselves, who could lose their credential as Certified Financial Planners. The CFP Board who regulate and vigorously enforce the CFP credential maintain strict guidelines for CFPs who peddle digital assets. Along these lines, the CFP Board recently adopted revised sanction guidelines, revised fitness standards, and revised procedural rules, which took effect July 1, 2024.... The CFP Board’s Enforcement Department is active, robust, and relentless in protecting the integrity of the CFP credential. For any CFP planning to peddle crypto-assets, fail not at your peril. The CFP Board’s Enforcement Department is watching and with one phone call can find out exactly what you are up to. Do not…risk your career. Just say no.” (From @JohnReedStark on X.com)

Wow! That is quite a tirade. The problem is that it is slanted, it's one sided, and it's misleading. John Reed Stark makes crypto sound very scary, and he clearly says that if you're a CFP, if you're a Certified Financial Planner, and you recommend bitcoin, you're going to get sanctioned by the CFP Board, and you're going to lose your CFP designation.

That is total bullshit. John Reed Stark does not work for the CFP Board, he does not represent the CFP Board, and the CFP Board has made no such statement. My company, the Digital Assets Council of Financial Professionals, is the official crypto education partner for the CFP Board, and I have never heard them say anything of the sort that John Reed Stark is claiming.

Let me tell you the truth about what the CFP Board does say about crypto: the document that John Reed Stark is referring to is the CFP Board's Notice to CFP Professionals regarding financial advice about crypto. That Notice was written in 2022. The CFP Board said they decided to issue the Notice because they were getting questions from CFPs about whether the CFP Board's Code of Ethics and Standards of Conduct applies to crypto. 

Certified Financial Planners, CFPs, are true professionals, and they want to make sure that they're following the rules. And the CFP Board is itself a professional organization, and it wants to give the financial advisors who hold the CFP designation the clarity they need, so they can conduct themselves properly.  

John Reed Stark is making it sound like this document is brand new. It's not. It was written in 2022. It's two years old. And John Reed Stark is making it sound like the CFP Board wrote it as a warning to CFPs not to go anywhere near crypto. The document says no such thing. In fact, let me quote directly from it, from the CFP Board's 2022 Notice (AI audio will help me out):

“The Code and Standards applies to cryptocurrency-related assets in the same way that it applies to all financial assets.”

That doesn't sound scary. That doesn't sound like the CFP Board is saying crypto is different. Quite the opposite. The CFP Board is saying to CFPs that you treat crypto like you treat every other investment. 

“The Code and Standards does not require a CFP Professional to provide and does not prohibit a CFP Professional from providing financial advice about crypto.”

Wow. John Reed Stark was wildly claiming that any Morgan Stanley advisor who recommends bitcoin is going to get slammed by enforcement, but the Notice from the CFP Board that John Reed Stark was quoting doesn't say that at all. They're saying, “fine. Do it. Don't do it. We don't really care. It's up to you.”

“CFP Board’s Code and Standards does not require a CFP Professional to offer financial advice on every financial asset that is available in the marketplace. A CFP Professional does not violate the Code and Standards by not providing advice about crypto. Moreover, the Code and Standards does not prohibit a CFP Professional from providing advice about crypto.”

See? Recommend bitcoin. Don't recommend bitcoin. It's between you and your client. The CFP Board is fine either way. 

“Under the duty of competence, a CFP Professional who lacks competence to provide financial advice concerning crypto must either gain competence, obtain the assistance of a professional who is competent, or refer the client to a professional who is competent.”

And here, the CFP Board simply says what you'd want it to say: that if you don't know anything about crypto, it's better for you to learn, or to refer the client elsewhere, than to simply tell the client, “no.” It's not at all what John Reed Stark is claiming. And in fact, the CFP Board says that if the advisor knows less than the client, then the advisor has to do what the client tells him to do.  

“CFP Board’s fiduciary duty also requires a CFP Professional to follow client instructions. The client may request that a CFP Professional purchase crypto for them. If a CFP Professional concludes that it is not in the client’s best interests, then the CFP Professional must explain the reasons why they would not recommend crypto in this circumstance. If the client, nevertheless, specifically directs the CFP Professional to purchase crypto, then the CFP Professional should review the firm’s policies and procedures. If there are no firm policies that prevent the transaction, then the CFP Professional should follow the client's instructions.”

So, how on Earth does John Reed Stark come to the conclusion that a financial advisor will lose their CFP designation by letting a client buy a bitcoin ETF? He's totally wrong and highly misleading. Here, in fact, is the CFP Board's conclusion: 

“Conclusion: The same standards apply to cryptocurrency-related assets that apply to all financial assets. To comply with CFP Board’s Code and Standards, including the fiduciary duty and the duty of competence, a CFP Professional must be competent to provide financial advice about crypto and consider these particular attributes and risks when providing that financial advice.”

So much for the stupid postings by John Reed Stark. The facts are not on his side, but he hates crypto so much that he'll apparently say anything. He distorts, he misleads, he takes out of context, he flat out lies simply because he's a crypto-hater, and he hates anyone who isn't a crypto-hater. And instead of conceding that he's been wrong all these years, he goes and posts onto X a wildly inaccurate and false tirade aimed at Morgan Stanley financial advisors, and in fact, all 100,000 CFPs operating professionally throughout this entire country. And in the process, he slanders the reputation of the CFP Board, which is doing a great job at helping financial advisors serve their clients’ best interests.

If you're a Morgan Stanley financial advisor, if you're a Certified Financial Planner at Morgan Stanley, heck, if you're a Certified Financial Planner anywhere, if you're a financial planner, financial advisor at any firm, you need to realize that John Reed Stark has no credibility, is dead-wrong about crypto, hates crypto, and is for some unexplained reason simply trying to scare you away from doing what you need to be doing to serve your clients’ best interests. You need to completely ignore John Reed Stark.

And the worst part of this whole thing is that he's not the only one acting this way. Find out who else is getting this wrong in 60 seconds. Stay with us for more on The Truth About Your Future.

Even Nobel laureates are getting it wrong: consider this op-ed that appeared in the New York Times on August 1st by economist Paul Krugman. He hates bitcoin too, and he has written why more than a dozen times over the years, and he's been consistently wrong. 

On August 1st, he wrote about everything that's happened in the election lately: Trump getting shot at, Biden quitting the race, the selection of Vance and Walz, and here's what he said (again, this isn't his voice, this is AI): 

“I didn’t anticipate the political twists and turns of the past few weeks, but then, who did? One thing I do blame myself for not seeing coming, however, is the extent to which this has become a crypto election.”

And then he wrote: 

“Six years ago, I argued that bitcoin and other cryptocurrencies serve no useful purpose, that their market value rested on nothing but technobabble and libertarian derp. I stand by that judgement, which has actually been reinforced by the passage of time.”

Really? The past six years has reinforced his view? Over the past six years, bitcoin's price has gone from $6,000 to $60,000. It's up 1000%! In that same time, the Dow is only up 60%. Which would you say is the winner? The one that's up 1,000% or just 60%?

Today, there are 420 million people worldwide who own bitcoin, including 52 million Americans. No useful purpose? JP Morgan moves $2 billion a day in cross-border transactions using blockchain technology. Nike, Burberry, Starbucks, Breitling, hell, even the Norwegian Seafood Association—they all use this technology to operate faster, safer, and to produce higher profits.

“Bitcoin mining is a process that consumes huge amounts of electricity, generating lots of greenhouse gases.”

This claim is very old, very out of date, and it's very wrong. Today, more than half of all bitcoin mining is from green energy. It uses just 0.2% of the world's energy. 

“But what problem does it solve that can’t be handled more easily and cheaply in other ways?”

Well, you could make that argument against every new technology. Who needed telephones in 1876? After all, you couldn't call anybody, because even if you had a phone, nobody else had one. So, who could you call? 

In 1977, Ken Olsen, the co-founder of Digital Equipment Corporation—at the time, DEC was one of the largest computer hardware companies in the world. Ken Olson said, and I quote, “there is no reason anyone would want a computer in their home.” I don't think you'd say that now. 

Or consider the automobile in 1910: slow, dangerous, expensive—let’s just stick with horses. When somebody hates an innovation, they use vague language devoid of any facts. They present it in a manner that's designed to scare you, and they publish it in an authoritative publication to impress you. 

When the locomotive first came on the scene, The Lancet in 1862 published a piece that said traveling by rail would cause headaches, deafness, insomnia, depression, numbness of the limbs, chilliness, softening of the brain, spinal softening, and epileptic seizures. Some people even argued you'd suffocate because you'd be traveling so fast you wouldn't be able to catch your breath. Crazy, right? But back in the day, people used that information to oppose the advancement of the railway industry. 

Hey, maybe bitcoin and blockchain technology haven't yet achieved all their potential. That doesn't mean they never will. So instead of bashing it and trying to ban it, how about trying to support it and improve it?  

“For most of us, crypto assets have few uses other than money laundering, extortion, and scams.”

That's a great soundbite, but that claim is not supported by the facts. According to Chainalysis, illicit activity involving bitcoin is only 0.15% of all bitcoin transactions. Illicit use of cash, on the other hand, is 3 to 5% of all transactions around the world, according to the World Bank. Nobody's talking about banning cash, so why is he talking about banning bitcoin?  And when Krugman does offer a statistic, he inverts it to make an incredible number sound bad. 

“Isn’t a claim that crypto is basically useless refuted by the fact that crypto assets are now worth more than $2 trillion? No. This wouldn’t be the first time…that fast-talking operators with a good story line have persuaded investors to pay large sums for ultimately worthless assets.”

The crypto asset class market cap is now $2 trillion. But instead of saying, “wow, I never thought that could happen, and I'm impressed that the price has risen 1000% in six years,” he insists on sticking to his old refrain, and somehow tries to suggest that reaching a $2 trillion market cap is a bad thing.

That's an act of desperation by someone who knows they've lost the argument, but they're just not willing to admit it. 

“Crypto isn’t like a company with a well-defined bottom line…”

No, it isn't, Paul. So, why do you persist in trying to compare it to one? You don't compare stocks to artwork or collectibles, yet you agree those have value. So why are you insisting that crypto isn't like a company, and therefore it's worthless? Paul's argument simply makes no sense. 

“Remember those Super Bowl ads?”

Sure, I do. So what? I remember Bernie Madoff, too. What does that have to do with anything today, and with what's going to happen in years to come? This is just a great example that when you can't win on the facts, you cite some old, outdated story. It might not be relevant, might not be accurate, but it sure distracts people from the truth. The New York Times gives Paul Krugman a reputable foundation for his inaccurate whining.

At the Washington Post, they don't publish op-eds of third parties. They write the opinion pieces themselves. Just last week, the Washington Post wrote an editorial complaining that republicans love crypto, and that Americans should beware. Here's what the Washington Post wrote: 

“Nothing much has changed about cryptocurrency in years. In fact, the biggest news has been the spectacular crash of cryptocurrency exchange FTX and the conviction of its founder on fraud charges.”

Really? That's the biggest news? That news is two years old. You think nothing has happened in blockchain or crypto development or adoption since then? Seriously? In the past seven months, forget about going back two years, just in the past seven months, the SEC has approved both bitcoin and Ethereum ETFs. Brazil, Russia, India, China, and South Africa have announced they're creating a payment system based on blockchain technology. The U.S. Senate Committee on Armed Services has directed the Department of Defense to explore the use of blockchain technology for national security. The California Department of Motor Vehicles has put 42 million car titles onto a blockchain to fight fraud, and the state of Michigan put $6.5 million of its pension assets into bitcoin.

And the Post just wants to talk about something that happened two years ago. Why aren't they covering all of this more recent news? I thought the Washington Post was a newspaper, not a history book.  

“Cryptocurrency is a volatile asset with no intrinsic value.”

I guarantee you that the editorial board of the Washington Post has no idea what that sentence means. They merely quoted Warren Buffett and Jamie Dimon, who have been saying this for years: that bitcoin has no intrinsic value. What they do is they say, look, when you look at a company, we look at the company's product. We look at the company's management. We look at the company's revenues and its profits. We look at its competition, and that's how we determine what the value of a company is. But if you look at bitcoin—bitcoin, they say, there is no company. There are no employees. There is no management. There is no product. Therefore, there are no revenues. There are no profits. And there is no competition. All of those are zeros. And since all of those are zero, the conclusion is bitcoin has no intrinsic value. It doesn't make any sense for the same reason that it doesn't make any sense to say that simply because bitcoin isn't a company, it has no value.

You could apply the same metrics to the Mona Lisa. The Mona Lisa doesn't have any competition. The Mona Lisa isn't a company. The Mona Lisa doesn't have any revenues or profits. But everybody would agree the Mona Lisa has value. I'll fundamentally say this: maybe you're right. Maybe there is no intrinsic value. Maybe there isn't a value to bitcoin. But there certainly is a price, and right now the price is about $60,000.  So, the Post is simply reciting something they heard from somebody else without understanding what it is they said or even trying to figure it out. 

“It is used almost exclusively to speculate or to engage in shady businesses, such as selling drugs or collecting ransom, for which the anonymous nature of crypto accounts comes in handy.”

Paul Krugman at the New York Times made the same claim. I already refuted it for you here. Notice that the Post editorial has no facts, no statistics, no sources for their statement. But they say it anyway. There's no way they would let one of their reporters make a claim in a news article without statistics and sources, but here in an editorial? Well, I guess those journalistic standards don't apply.

Oh, and by the way, crypto is not anonymous. It is pseudonymous. I might not know your name, but I do have access to seeing your account. That's precisely why law enforcement loves crypto. Blockchain technology is a distributed ledger. Everybody with internet access can see every transaction ever done on a blockchain. I don't know the people, but I can see the movement of the money.

You know, it's hard to follow cash: bank robber steals cash out of a bank and runs away. It's hard to follow the cash, but crypto, that's easy. Digital money leaves a digital footprint. In fact, to prove this point, last year, the Hamas terrorist regime announced to its financiers, stop sending us bitcoin because law enforcement can track it and trace it and grab it and also figure out who's behind it.

It's just an example of how the Post wrote an editorial about a subject it really doesn't know much about.

“The ‘value’ of so-called tokens does not rely on the government.”

That sentence reveals their bias perfectly. They put the word “value” in quotes, and they didn't refer to tokens. They called them “so-called tokens,” which is clearly meant to be demeaning and insulting and pejorative. They said that these tokens don't rely on the government, as if being independent from the government is a bad thing.

Look, here's the truth: in the world of crypto, assets are called tokens. In the stock market, they're called shares. If the Post had written, “the ‘value’ of so-called shares does not rely on the government,” you would have realized that it was a stupid statement. But because they used crypto jargon, their criticism sounded legit, but it's not. 

“Criminals are safe from the machinations of obscured technocrats at the Treasury Department or the Federal Reserve.”

Nonsense! Federal regulators and prosecutors have shut down dozens of crypto frauds. They've recovered tens of billions of dollars of lost funds, and they've thrown dozens of people into jail. Criminals are not safe simply because they choose crypto as their method of criminality. This is a blatant falsehood. 

“The value of the tokens relies entirely on what other investors would be willing to pay for them. In this way, they are a bit like digital baseball cards—without the pictures.”

Yeah? So? This is exactly the same for stocks and bonds and gold and real estate. So, if the Post isn't complaining about stocks and bonds and gold and real estate, why are they complaining about bitcoin? And by the way, digital baseball cards and digital collector cards and football and basketball and hockey and soccer: this is a billion dollar business, and you do get pictures. In fact, you get video and access to players and coaches and swag and team statistics and other benefits. That's why it's a billion dollar business with the NFL, NBA, NHL, MLB, MLS, all over this. 

“The crypto lobby now supports MAGA to push back against Biden administration regulators who have been trying to install some guardrails to protect investors.”

Total bullshit.  Biden administration regulators? Does the Post mean Gary Gensler, the head of the SEC? He has refused to install any guardrail to protect investors. He has stated over and over again over the past several years that no new rules are needed. He's been hauled into Congress a dozen times, where senators and members of the House have demanded that he take action, and he has belligerently refused to do so. There's even a bill in Congress to fire him.

“Gary Gensler, the head of the SEC, has proposed that crypto assets be considered securities, subject to the same regulatory constraints covering other securities.”

Wrong. Gensler has refused to let crypto companies register with the SEC, and this is why the crypto community is so upset with him. The crypto community has been begging for regulations. You name me any other industry that asks to be regulated: the banking industry, the real estate industry, the oil and gas industry, the agricultural industry, the pharmaceutical industry. Can you imagine any of their lobbyists going to Congress and saying, “please regulate us”? But that's exactly what the crypto industry has been doing because it knows that without regulations, bad players can exist. And having crooks like Sam Bankman Fried and FTX around, that doesn't do anybody any good.

The Post has it all wrong. They need to do some investigative reporting on this before they make flat-out wrong statements. Why am I giving you this retort to the comments made in the past week by John Reed Stark, Paul Krugman, and the editorial board of the Washington Post? Why am I just not simply ignoring it as just chatter? It's because these folks have credibility in the marketplace, because they have a platform on which they can speak, because they are capturing the attention of millions of people. And if they're allowed to continue saying everything that they're saying without anybody retorting, then that's going to be harmful to you. It's going to be harmful to your investments. It's going to be harmful to your financial future. It's going to be harmful to U.S. jobs. It's going to harm the U.S. economy. There is no benefit by allowing these folks to cite as fact what is nothing more than their own distorted, inaccurate, wrongful opinions.

And we need to recognize that, as crypto has established itself in the mainstream, when you have a company like Morgan Stanley, allowing its 15,000 financial advisors to recommend bitcoin to their clients—you know this is in the mainstream. When you have major pension funds in the country placing bitcoin into their portfolios for the benefit of the retirement security of their pensioners—you know this is now mainstream. When you have a leading presidential candidate standing on stage saying, “I want to make the United States the center of crypto,” you know this has gone mainstream. And yet, when we continue to have people sticking by their old out-of-date positions, refusing to acknowledge how things have evolved and developed and changed, they're doing more harm than good. And if you listen to them, you're going to do yourself and your clients more harm than good. 

We need to stand up for what is going on. We need to acknowledge the inaccuracies that are being made by some. And we need to let people know that it's safe to get in the water. Maybe crypto is risky and dangerous and illicit 10 or 12 years ago. That was then; this is now. You have to ask yourself, who am I going to pay attention to? What position am I going to take on this? And how am I going to best prepare for myself and my clients’ financial futures.

Thanks for listening.

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