There are plenty of lessons to learn from the ongoing cryptocurrency crash, which has already vaporized more than $1 trillion in wealth worldwide. Chief among them is the inherent danger of financial speculation and the perils of concentrating too much of your wealth in one asset, a lesson investors seem to need to relearn every decade or so.
But it’s also an important reminder that financial regulations are more than just so-called red tape, and the people who enforce them aren’t “gatekeepers,” as Conservative leadership hopeful Pierre Poilievre would say. Instead, they’re often the ones protecting us from our own worst instincts — and the predators determined to profit from them.
It was only a few weeks ago that Poilievre was touting cryptocurrencies as a way to “opt out” of the inflation he alleges is being caused by the Bank of Canada. “Government is ruining the Canadian dollar, so Canadians should have the freedom to use other money, such as bitcoin,” he said in late March. “Canada needs less financial control for politicians and bankers and more financial freedom for the people. That includes freedom to own and use crypto, tokens, smart contracts and decentralized finance.”
This freedom has already come at an enormously high cost for anyone who listened to him and shifted their assets into crypto. If they put their money in Terra, a self-described “stablecoin” that was supposed to remain tethered to the U.S. dollar and instead crashed by 99 per cent last week, that cost could be life-altering — and not in a good way. For them, as Janis Joplin used to sing, freedom is just another word for nothing left to lose. (The value of the Canadian dollar, for what it’s worth, is down just one-10th of a penny this year.)
It’s not just the smaller cryptocurrencies that have gotten whacked. As Postmedia’s Kelly McParland said in his column, “Bitcoin, the most popular cryptocurrency, was at an all-time high six months ago. Now it’s worth half as much. Wise people don’t bet the economy on such things.” Wise people also don’t trade in false binaries, and don’t treat government rules and regulations as deliberate impediments to freedom and liberty.
The big question now is whether the Conservative Party of Canada is going to elect a wise person as their next leader or fall for Poilievre’s infomercial sales pitch. His reckless embrace of a speculative investment like crypto should have been immediately disqualifying, and the subsequent collapse in its value (and the damage that’s done to the portfolios of his most ardent supporters) should serve as the epitaph on his career as a public servant.
Don’t bet on either happening. While an apology to the people whose financial lives he harmed would be nice, along with a clear explanation of the risks of cryptocurrencies and other forms of financial speculation, those probably aren’t coming any time soon. Instead, he will almost certainly find someone else to blame: global financial institutions, maybe, or even Justin Trudeau if he’s feeling particularly ambitious. That is Poilievre’s way.
The rest of us should be paying close attention to his ongoing attacks on the role and responsibilities of government officials, one that closely echoes Steve Bannon’s 2017 pledge to pursue the “deconstruction of the administrative state.” We should remember it was the absence of gatekeepers, not their existence, that led to high-profile recent catastrophes at the Mount Polley mine in British Columbia and Lac-Mégantic in Quebec. In both cases, lax regulations led directly to human and environmental tragedies that could have been averted. And in both cases, the lesson was clear: allowing industries to regulate or monitor themselves is a recipe for disaster.
None of that has dampened Poilievre’s enthusiasm for this recipe. To him, fewer regulations and less government cannot help but improve freedom and increase prosperity. But the recent cryptocurrency crash and the proximity of his political fingerprints to it should give other Canadians pause, including — and perhaps especially — those with a vote in this year’s CPC leadership race. We’ve seen time and time again, the “gatekeepers” can be the ones protecting us from the dangers we can’t or won’t see. Maybe it’s time we asked the people like Poilievre, who keep telling us to remove them, which masters they’re really trying to serve.