Cryptocurrency: Can It Pierce Through Exclusion in America’s Financial System?

What happens when racially biased judgments persist within America’s banks? They perpetuate systemic distrust and suppress the economic growth of people of color (POC), forcing many to rely on costly, bank-bypassing services like check-cashing stores—fees that can total nearly $40,000 over a working lifetime. Such outcomes reflect not individual failure but institutional design: a centralized, discretionary, and diversity-lacking financial system that continues to exclude.

Emerging technologies such as cryptocurrency offer an apparent alternative. The blockchain, a decentralized public ledger maintained across global networks of computers (“nodes”), removes the need for human intermediaries. Each transaction follows algorithmic rules, ensuring transparent verification and replacing human discretion with programmatic certainty. In theory, cryptocurrency could reimagine the U.S. financial system as one built on trustless, inclusive access.

Persistent Bias in the Financial System

The need for the cryptocurrency trade system in America increased in recent years with racial biases in America’s financial sector causing economic contraction. Examples of this include modern redlining (to highlight a known POC residential area as an economically problematic, consequently denying them from many financial services), which includes banks denying POC in America loans at significantly higher rates in comparison to white people. 

The New York State Attorney General [2023] , analysing mortgage data from years 2018-2019, states that black and asian applicants were 43% more likely to be rejected than white applicants whilst controlling other external economic factors such as credit score, income, and DTI (Debt to Income Ratio – the proportion of debt one has to their income)¹. Additionally, with New York’s higher percentage of POC (46%) compared to the national average of 39% [U.S. Census Bureau, 2023]⁸, the volume of mortgages (the loans acquired by households in an economy) still remains higher for white people compared to POC. 

This demonstrates how the historical racially-biased redlining practices by the American Financial Sector banned by the Fair Housing Act of 1968 is still having a long term effect on the racial bias of current banks. This has consequently driven many POC to bank-bypassing financial systems through their decades-long fortifying distrust with the bank. One example of this is through Check-Cashing stores, which allow for workers to pay for their liabilities with their salaries or wages without a bank account, however these do come with a 1-5 % fee on the salary or wage taken out; this on average has amounted to nearly $40,000 in payment of these fees alone in a working lifetime [Fellowes, 2016]². This highlights the huge economic growth loss that the American financial system causes as this $40,000 spent on check-cashing fees could’ve been used to build POC wealth. However, cryptocurrency’s access through the internet makes trading with cryptocurrency available to anyone at any time and thus grants the possibility of a gain in economic wealth by investing in a coin that rises up in value to anyone. Additionally with P2P and BitPay being in place, it allows for people to directly convert their crypto from their digital wallet to Fiat Currency in their physical wallet (and vice versa) through the internet with which they can pay their rent or mortgage with, without a bank account. Hence, highlighting how cryptocurrency has become a solution for POC who distrust historically racially-biased banks with their financial assets, which usually doesn’t require them to pay fees as large as those through Check-Cashing stores. 

The Decentralization Dilemma

Even though cryptocurrency seems like an inclusive and reliable solution for POC who distrust the bank, in actuality the stability and decentralisation of cryptocurrency is questionable. This can be seen by the wealth of cryptocurrency being concentrated in major cryptocurrencies, like bitcoin, usually among the top 1-0.1% (who own a large proportion of that bitcoin) [Makarov, 2021]³. These few are known as ‘whales’, who ultimately have disproportionate influence over cryptocurrency value. Once they sell the cryptocurrency the selling pressure for that specific cryptocurrency in the cryptomarket will drastically increase, plummeting its price immediately. This causes huge instability in the cryptocurrency world and if anything makes it harder for Americans to utilise cryptocurrency when the value of it is placed in the few unknown whales. Furthermore, only 10 operators own 74% of BTMs [Coinex, 2025] ⁴ , which are usually the only way for the unbanked to convert Fiat into crypto. Hence highlighting the infrastructure concentration present within the cryptocurrency system. 

As a consequence, giving the 10 operators a monopoly on access, permitting them to transform BTMs into profit centres by charging fees of 10% or more [Investopedia, 2025] ⁵ . This further compromises cryptocurrency’s utility for POC compared to Check-Cashing stores. Additionally, even with cryptocurrency’s inclusivity, its use in transferring cryptocurrency to fiat currency is proven difficult. Generally, paying with crypto will automatically incur a taxable event that will have to be recorded and calculated and then sent to the IRS, as cryptocurrency is a capital asset, not a currency [IRS, 2014] ⁶ . Concurrently, converting cryptocurrency to fiat currency with other measures like Bitpay (to try and avoid the IRS’ tax if large), requires a gas fee (a fee paid to the people who run the blockchain). The gas fee, however, is dependent on the volatile demand for crypto to Fiat transactions. This decreases cryptocurrency’s utility as an alternative payment method. Social media has only further deteriorated cryptocurrency’s utility, by exacerbating gas fee increases through glamourising cryptocurrency as a one-way street to becoming a millionaire. 

This has led to many sticking to using Check-Cashing stores — continuing the paradox of wealth loss for POC in America. The looming Regulatory Paradox is also imminent with cryptocurrency: if cryptocurrency (an unregulated and unstable platform) became so mainstream that it could replace the bank, the government would be forced to implement heavier regulations on cryptocurrency to ensure economic stability. However, these high regulations imposed on such a decentralised system would turn cryptocurrency into a slow, functionally ineffective financial tool. Hence, POC would gravitate to their only option, Check-Cashing stores. 

Concluding Remarks

Given that the instability of cryptocurrency is prevalent throughout, rather than using crypto as a substitute for the American Financial system, the Financial System itself needs to be reformed to decrease racial bias towards POC, to prevent POC searching for economy-contracting, bank-bypassing alternatives. With only 20.2% of executives in America’s Financial Sector being POC [Bermiss, 2023]⁷ , racially-biased policy blindness becomes imminent. An example of this is the approval of using credit score (based on historical debt) in loan diligence as equitable, even though redlining practices denied POC loans (which would have bettered their credit score) with the bank at much higher rates than their white counterparts. As a consequence, comprehensive DEI laws need to be put in place in order to prevent and limit future racial policy blindness.

In conclusion, even though cryptocurrency’s decentralised setup initially demonstrates true potential to act as a bank-bypassing substitute for POC, the centralisation within cryptocurrency’s system only makes the system vulnerable to volatility. Even if the volatility within the cryptocurrency system were fixed, the decentralised nature of it would prove difficult to make mainstream as the nature of financial systems has to be centralised in order for current monetary and fiscal policies to be effective at preventing economic failure once enacted. So rather than finding loopholes around the racially-biased financial system in America, why not make the American financial system itself more equitable?

Citations

1. Office of the New York State Attorney General (NY AG). “Racial Disparities in Homeownership: The Continuing Impact of Redlining and Modern-Day Bias”. Office of the New York State Attorney General. 2023. https://ag.ny.gov/sites/default/files/reports/oag-report-racial-disparities-in-homeownership.pdf

2. Fellowes, M. “Banking on Wealth: America's New Retail Banking Infrastructure and Its Wealth-Building Potential”. Brookings Institution. 2016. https://www.brookings.edu/research/banking-on-wealth-americas-new-retail-banking-infrastructure-and-its-wealth-building-potential/

3. Makarov, I., Schoar, A. “Blockchain Analysis of the Bitcoin Market”. National Bureau of Economic Research Working Paper No. 29396. October 2021. https://doi.org/10.3386/w29396

4. CoinEx. “Top Bitcoin ATM Operators 2025: Global & US Crypto ATM Network”. CoinEx Academy. May 30, 2025. https://www.coinex.zone/en/academy/detail/2731-top-bitcoin-atm-operators-2025-global-us-crypto-atm-network?pId=31&sId=57

5. Investopedia. “Bitcoin ATM (BTM)”. Investopedia. Updated September 30, 2025. https://www.investopedia.com/terms/b/bitcoin-atm.asp

6. U.S. Internal Revenue Service (IRS). “IRS Virtual Currency Guidance”. U.S. Treasury Department, Notice 2014-21. 2014. https://www.irs.gov/pub/irs-drop/n-14-21.pdf

7. Bermiss, S., Green, J., Hand, J. R. M. “Does Greater Diversity in Executive Race/Ethnicity Reliably Predict Better Future Firm Financial Performance?”. Journal of Economics, Race, and Policy, 7, no. 1, (March 2024): 45-60. https://doi.org/10.1007/s41996-023-00132-0

U.S. Census Bureau. “2023 American Community Survey, 1-Year Estimates”. U.S. Census Bureau. 2023. https://www.census.gov/programs-surveys/acs