Former US Treasury Secretary and World Bank chief economist Larry Summers says that cryptocurrency will do better if it is properly regulated rather than treated as a liberal paradise.
Larry Summers sees crypto benefit from strong regulations
Lawrence Summers, who served as Treasury Secretary in the Clinton administration and director of the White House National Economic Council in the Obama administration, spoke about crypto regulation during an interview with Bloomberg on Friday. A former chief economist at the World Bank, he is currently President Emeritus of Harvard University.
He was asked why regulators around the world had “deep skepticism” about cryptocurrencies. China, for example, has been cracking down on crypto activities. Summers began by saying that “crypto” denotes “a desire for secrecy in connection with large sums of money,” explaining:
When you have large sums of money going underground, you face money laundering risks, risks of supporting various types of criminal activities, and risks of robbing innocent people.
“The reality is that we will not have a viable aircraft industry if we do not regulate the safety of airlines,” he continued. “We will not have the transportation system that we provide if we do not regulate the safety of cars.”
He added that the blockchain-based payments industry would “do better by regulating it in a proper way, rather than trying to be a kind of libertarian paradise,” noting:
I think the crypto community needs to realize this, and it needs to work collaboratively with governments and if they do. I think this innovation could be one of the important innovations of this period.
The former chief economist of the International Monetary Fund noted that some people believe in the idea that cryptocurrency “will be a kind of libertarian paradise where we will not be able to enforce bank rules, such as knowing your customers.” [KYC]We will be able to move money freely and avoid paying taxes.”
“I think it’s a recognition that all industries need to be systemically important,” Summers said, adding:
It’s not quite the same as discussing the big tech companies. They need a regulatory framework. Not only do they need it to protect consumers, they need it to protect themselves.
In closing, he said, “We wouldn’t make the New York Stock Exchange the center of the global stock market if we didn’t have a strong SEC,” emphasizing, “Even if people don’t like the rules, some time.”
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