Cryptocurrency: Debunking Myths, Understanding Realities, and Exploring Economic and Social Impacts – The Fulcrum

Report on Cryptocurrency’s Alignment with Sustainable Development Goals

Executive Summary

A panel discussion hosted by the Network for Responsible Public Policy (NFRPP) on October 25th, 2025, featured intense skepticism regarding the role and viability of cryptocurrencies. Panelists Mark Hays of AFR/AFREF, Professor Hilary J. Allen of American University Washington College of Law, and moderator Peter Coy highlighted significant conflicts between the cryptocurrency industry and the principles of the Sustainable Development Goals (SDGs). The discussion concluded that cryptocurrencies, in their current form, pose substantial risks to economic stability (SDG 8), promote inequality (SDG 10), and undermine peace, justice, and strong institutions (SDG 16).

Analysis of Cryptocurrency’s Foundational Premise and Practical Failures

The Theoretical Goal of Financial Inclusivity

The genesis of cryptocurrency was rooted in a desire to rectify perceived injustices within the traditional, government-controlled financial system. Proponents aimed to create a decentralized system, free from the control of central banks and regulators, which they believed would lead to a more equitable financial landscape. This ambition aligns superficially with the aims of SDG 10 (Reduced Inequalities) by seeking to democratize finance. The core technology, the blockchain, was presented as a secure and transparent ledger to facilitate this new form of currency.

Failure to Meet Sustainable Economic Objectives

In practice, the panel concluded that cryptocurrency has failed as a technology and does not support sustainable economic models. Professor Allen noted that the concept of replacing a regulated system with an unregulated technological one is fundamentally flawed. Instead of reducing inequality, the system has become dominated by wealthy interests and has failed to function effectively as a stable form of currency, thereby failing to contribute positively to SDG 8 (Decent Work and Economic Growth) or SDG 10.

Economic Instability and Contradiction with SDG 8

The Conflict Between Currency and Investment

A primary issue identified is the inability of cryptocurrencies to function as both a stable medium of exchange (money) and a speculative investment. This duality creates inherent volatility, which is antithetical to the financial stability required for sustainable economic growth.

• Stable Currency: Requires price stability to be a reliable unit of account and medium of exchange.
• Speculative Investment: Requires price appreciation to generate returns.

This conflict ensures that cryptocurrencies cannot effectively serve the role of money, undermining the stability necessary to achieve the objectives of SDG 8.

Designed Deflation and Economic Harm

The fixed supply of cryptocurrencies like Bitcoin creates a deflationary model. As Professor Allen explained, a deflationary currency discourages spending and investment, as its purchasing power is expected to increase over time. This actively hinders economic activity, posing a direct threat to economic growth and stability, which are central tenets of SDG 8.

Threats to Governance, Justice, and Institutional Integrity (SDG 16)

Erosion of Trust and Accountability

The “trustless” nature of cryptocurrency, intended to replace trust in institutions with trust in technology, has proven to be a fallacy. In reality, trust is merely shifted to unregulated, often anonymous, actors and platforms. This lack of transparency and accountability undermines the core principles of SDG 16 (Peace, Justice and Strong Institutions), which calls for effective, accountable, and transparent institutions at all levels.

As Mr. Hays articulated, replacing democratically controlled, government-issued currencies with privately controlled digital assets means “replacing one set of masters with another,” without the public oversight essential for just governance.

Facilitation of Illicit Financial Flows

The panel highlighted the significant use of cryptocurrencies for illicit purposes, which directly contravenes targets within SDG 16 aimed at reducing illicit financial flows and combating organized crime.

1. Terrorist and State Financing: Professor Allen noted that cryptocurrency is used to fund approximately half of North Korea’s nuclear program.
2. Cybercrime: It is the primary medium for ransomware payments that target critical infrastructure.
3. Violent Crime: The untraceable nature of some assets has been linked to violent crimes, including kidnapping and dismemberment.

Operating in a space without laws, the cryptocurrency market actively enables activities that destabilize nations and threaten global peace and security.

Undermining Democratic Processes and Increasing Inequality (SDG 10 & SDG 16)

Disproportionate Political Influence

The report underscores the immense financial power wielded by the cryptocurrency industry to influence public policy and regulation. Fueled by venture capital, the industry has engaged in extensive lobbying and political spending, becoming one of the largest corporate spenders in the 2024 elections. This activity distorts the democratic process and ensures that regulations favor wealthy investors rather than the public good, exacerbating inequality and weakening institutional integrity, in direct opposition to SDG 10 and SDG 16.6 (Develop effective, accountable and transparent institutions).

The Need for Regulatory Action and Public Awareness

The panel concluded with a call for systemic reform to mitigate the risks posed by the cryptocurrency industry. Key recommendations include:

• Campaign Finance Reform: To curb the disproportionate influence of crypto-related financial interests on policymakers.
• Public Education: To ensure citizens understand the risks associated with unregulated financial products and can advocate for protective policies.

Without robust regulatory frameworks and informed public discourse, the cryptocurrency sector will continue to operate in a manner that is detrimental to achieving the Sustainable Development Goals.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 16: Peace, Justice and Strong Institutions

  This is the most prominent SDG in the article. The text discusses how cryptocurrencies facilitate illicit activities, undermine the rule of law, and how powerful financial interests influence politics to avoid regulation. These themes directly relate to building peaceful, just, and strong institutions.

• SDG 10: Reduced Inequalities

  The article touches upon the initial promise of crypto to create a fairer financial system but concludes that it is “just as subject to the same kinds of controlled wealthy interests that we see in our current financial system.” This highlights the failure to reduce economic inequalities and the need for regulation to protect the general populace from predatory financial systems.

• SDG 8: Decent Work and Economic Growth

  The discussion on financial stability is relevant to this goal. The article critiques cryptocurrencies for being deflationary, unstable as investments, and poor as payment systems. The desire of crypto companies to “act like banks, but without the regulations” poses a risk to the stability of the broader financial system, which is a prerequisite for sustainable economic growth.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 16.4: Significantly reduce illicit financial flows… and combat all forms of organized crime.

   The article directly connects cryptocurrencies to this target by stating, “crypto is being used to fund half of the North Korean nuclear program. The goal of all ransomware attacks is to target infrastructure. We’re starting to see gruesome crimes… where people were having their fingers dismembered in kidnappings, trying to get access to crypto cold storage wallets.”

2. Target 16.5: Substantially reduce corruption and bribery in all their forms.

   This target is addressed when the article describes the political influence of the crypto industry. It notes that deep-pocketed investors use lobbying to “create the regulatory environment they want” and that they “spent a tremendous amount of money in the 2024 election cycle, targeting many different political figures… more money than pretty much any other corporate entity.” The call for “campaign finance reform” further reinforces this connection.

3. Target 16.6: Develop effective, accountable and transparent institutions at all levels.

   The article critiques crypto as an “unregulated system” where there is no “transparency into who is running the show.” It contrasts this with government-issued currencies, which are tied to institutions that, “as flawed as they are for now, are democratically elected and controlled.” This highlights the importance of accountable and transparent governance, which crypto currently lacks.

4. Target 10.5: Improve the regulation and monitoring of global financial markets and institutions.

   The central theme of the article is the danger of an unregulated crypto market. The panel’s skepticism and the argument that crypto advocates “want companies to act like banks, but without the regulations traditional banks must follow” directly point to the need for improved regulation as specified in this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator for Target 16.4 (Illicit Financial Flows): The article implies the need to track the volume and value of cryptocurrency transactions linked to illicit activities. The specific examples of funding for North Korea’s nuclear program, ransomware attacks, and kidnappings serve as qualitative evidence that could be quantified to measure progress.
• Indicator for Target 16.5 (Corruption): A direct indicator is mentioned in the text: the amount of money spent by corporate entities, such as the crypto industry, on political campaigns and lobbying. The article explicitly states that crypto entities “spent more money than pretty much any other corporate entity in the 2024 elections,” suggesting this is a measurable metric of influence.
• Indicator for Target 10.5 (Financial Regulation): The article implies an indicator related to the existence and enforcement of a comprehensive regulatory framework for cryptocurrencies and digital assets. The entire discussion revolves around the lack of such regulations and the push by the industry to remain unregulated, making the establishment of such a framework a key measure of progress.

4. Table of SDGs, Targets, and Indicators

Source: thefulcrum.us