I've enjoyed watching crypto acolytes gradually learning why the consumer protections of traditional banking and investment exist. Until regulation catches up there's bound to be a stream of unscrupulous scammers taking notes from the financial crises of the past.
Crypto is absolutely full of scammers, but head to a poor area and look at all of the payday loan fronts. Let's not pretend that the USD and existing banking industry are shining bastions of righteousness.
None of the companies mentioned are even in the same market as the predatory lenders you seem to be confusing them with. I'd wager they want to be subjected to the same oversight as "legitimate"(aka incumbent) players, but as has been shown time and time again, cooperating with the existing regulatory bodies when one is not a part of the club is akin to talking to a brick wall. Why HN wants to carry water for massive incumbent banks and their lackeys in the bureaucracy is beyond me.
Absolutely, but desperate people are desperate and will find even more unscrupulous people who would do more than charge them interest if the loan is not repaid.
Understanding why they exist in the first place may be more important than banning them outright.
Where do people go if they can’t get a payday loan and need those funds to make ends meet [1]? You have to understand why a fence exists before deciding how and why to tear it down. Payday loans are a symptom, not a root cause and not necessarily evil considering the risk they take on by issuing loans to exceptionally marginal borrowers.
In the US excited to see USPS head towards once again providing banking services to the underbanked [1] this was something very convenient in the UK [2]
To a lender that offers reasonable effective interest rates - the kind of lender that can't currently survive in the business space because such insanely exploitative arrangements are currently legal and muscle out more reasonable lenders.
Interest rates are mostly determined by two things: 1) in what other activity could I invest this money; and 2) what is the probability that I won't be repaid. Well, also a third thing: overhead to run the business.
Payday loans are fundamentally unprofitable if they charge less than usurious rates of interest.
First, the default rate is sky-high: News articles suggest that over half of payday borrowers default within a given year.
Second, the loan amounts are relatively small, but require a retail storefront and staff.
Think about other types of lending: A mortgage is underwritten once per decade and involves 100's of thousands of dollars at once with a three decade term. The band will earn hundreds of thousands of dollars in interest over the course of the loan, so having a banker in a tailored suit spend a couple hours with you is a trivial cost. It's also secured by real property which can be repossessed in the event of a default.
A credit card is underwritten once a decade. The small transactions are mostly automated and much of the risk is pushed onto the merchant. So, again, tens of thousands of dollars can be earned per account. Retail space is not required to scale the business. The default rate is higher and the loan is unsecured, so it carries a higher interest rate.
Now look at a payday loan. Half of borrowers will default each year, and collection rates will be low (the borrowers mostly don't have assets to recover). The term is usually a few weeks, so it requires human interaction 12-26 times per year. The loan amounts are also small, so 1/26th of whatever a reasonable interest rate is isn't enough to cover defaults and all the manual processes.
If you don't believe me, the above statements are trivially falsifiable: Just start your own payday loan company with "reasonable" interest rates and see how long you last.
If the news articles reporting 50%+ default rates are true, your non-profit payday loan company need to charge at least 100% APR just to break even before overhead and cost of capital.
All of this is missing the point that Nexo, Celsius etc do not fulfill the niche of a "payday lender" or anything of the sort. They exist for people who think they can make financial plays in the market while retaining exposure to the underlying asset.
None of which is illegal - perhaps it should be discouraged for people with very little on the line, but that's a separate argument.
Why do we continue to pretend that the "crypto" industry is not absolutely chock full of scammers?