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‘It is very dangerous’: Founder of bank backed by Goldman Sachs calls crypto a threat

June 8, 2022, 8:21 PM UTC

As major investment firms and credit card companies embrace cryptocurrencies, others are voicing skepticism about the asset’s increasing prominence—especially after the collapse of stablecoin TerraUSD last month.

On Tuesday, the founder of a Goldman Sachs–backed bank said that crypto poses a threat to global payment systems, CNBC reported. “It is very dangerous,” said Anne Boden, founder of the U.K.-based Starling, at the Money 20/20 fintech conference in Amsterdam.

Boden specifically called out the danger of linking crypto wallets to payment processing companies, which can make those companies and their consumers more vulnerable to scammers. “A lot of [crypto] wallets are being connected directly to payment schemes,” said Boden. “This is a threat to the safety of our payment schemes around the world.”

Boden founded Starling in 2014 as a challenger bank to long-established British institutions. With no physical branches and all transactions made through a digital app, the bank offers accounts ranging from personal to business to teen-focused. 

Starling did not respond to Fortune’s request for comment.

“Customers are being scammed,” Boden said. “We’re spending far more of our time protecting customers from the scammers than we are trying to promote crypto.”

Last week, the Federal Trade Commission issued its own report on the dangers of crypto scams. “Cryptocurrency is quickly becoming the payment of choice for many scammers,” said the FTC in its report. Consumers lost over $1 billion between January and March of this year through crypto scams, according to the FTC. In terms of the total amount of money lost to fraud in that period, a quarter was in crypto.

Most defrauded consumers lose money through bogus investment opportunities, which typically take two forms: romance scams and business or government impersonation scams, according to the report. The former involve false love interests, while the latter take the form of fake warnings from official-seeming entities.

When asked if Starling would ever allow crypto to become part of its transaction ecosystem, Boden said that she couldn’t see it happening for years, CNBC reported, and that the companies in control of the currencies needed to get fraud under control first.

Last year, Starling received a $69 million investment from Goldman Sachs as part of a funding round of more than $300 million.

There are several efforts at both the state and federal level in the U.S. to impose regulations on the crypto market and help limit volatility and risk. Most recently, Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced the Responsible Financial Innovation Act on Tuesday.

The bill comes on the heels of TerraUSD’s public collapse in May, when it fell to as little as 9 cents instead of its theoretical $1 peg. While other stablecoins like Tether and USD Coin are tied to tangible assets, TerraUSD was tied to another cryptocurrency, Luna, in order to maintain price equilibrium. With its collapse, investors saw billions of dollars disappear overnight.

Lummis and Gillibrand’s bill “creates regulatory clarity for agencies charged with supervising digital asset markets, provides a strong, tailored regulatory framework for stablecoins, and integrates digital assets into our existing tax and banking laws,” said Lummis in a statement.

If passed, the bill would extend powers of the Commodity Futures Trading Commission to regulate crypto as “ancillary assets.”

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