# Crypto assets may pose systemic risk to the larger economy

Crypto assets do not currently pose a [systemic risk](../concepts/systemic-risk.md) to the United States economy, but may in the future if their growth is left unchecked. Allegedly the [paper wealth](paper-wealth.md) locked up into crypto tokens is allegedly only on the order of the $1 trillion which is inconsequential next to the amount of capital allocated in both the US equities and bond markets. Crypto is still a relatively tiny asset class and a sudden crash in the market, while devastating to individual retail investors, would likely not bring amount much damage to financial institutions or markets as a whole. 

Because of regulation and [risk](risk.md) aversion most banks and companies have very little exposure to the crypto market and will not put crypto assets directly on their balance sheet. This fundamentally limits the amount of damage a sudden crash in crypto assets could actually cause as most companies would simply not be within the financial "blast radius" were the market to go to zero overnight.

In the event of a sudden crash retail investors and the public who have chosen to gamble on crypto assets would see all of their wealth disappear instantly, likely with no recourse or chance of a bailout. This would be a very socially socially corrosive event which would be financially devastating to the public and erode trust in institutions. This is real problem that crypto assets and their insane risk properties introduce.

## References
1. Nolan, Hamilton. n.d. ‘The Ticking Bomb of Crypto Fascism’. Accessed 21 March 2022. https://inthesetimes.com/article/the-ticking-bomb-of-crypto-fascism.
1. Hanley, Brian P. 2018. ‘The False Premises and Promises of Bitcoin’. ArXiv:1312.2048 [Cs, q-Fin], July. http://arxiv.org/abs/1312.2048.