Former U.S. treasury secretary and chief economist at the World Bank, Larry Summers, says cryptocurrency will do better regulated in a sound way instead of being treated as a libertarian paradise.
Lawrence Summers, who served as the Secretary of the Treasury in the Clinton administration and director of the White House National Economic Council in the Obama administration, talked about cryptocurrency regulation during an interview with Bloomberg Friday. A former chief economist at the World Bank, Summers is currently Harvard University’s President Emeritus.
He was asked why regulators worldwide are “deeply skeptical” about cryptocurrencies. China, for example, has been cracking down on crypto activities. Summers began by stating that the word “crypto” suggests a “desire for secrecy with respect to large financial sums,” elaborating:
When you have large financial sums happening in secret, you have risks of money laundering, risks of supporting various kinds of criminal activities, risks of innocent people being ripped off.
“The truth is that we wouldn’t have a viable airplane industry if we weren’t regulating airline safety,” he continued. “We wouldn’t have the transportation system we do if we didn’t regulate automobile safety.”
He added that the blockchain-based payments industry “is going to do better regulated in a sound way, rather than trying to be some kind of libertarian paradise,” noting:
I think the crypto community needs to recognize that, and needs to work cooperatively with governments and if they do that. I think that this innovation can be one of the important innovations of this period.
The former IMF chief economist pointed out that some people believe in the idea that cryptocurrency is “going to be some kind of a libertarian paradise where we are not going to be able to enforce bank rules, like knowing your customers [KYC], where we are going to be able to move money freely and avoid paying taxes.”
Summers opined, “I think it’s a recognition that all industries need to come to that are systemic in their importance,” adding:
It’s not entirely unlike the discussion of big tech companies. They need to have a regulatory framework. They don’t just need it for the protection of their consumers, they need it for the protection of themselves.
In conclusion, he said, “We wouldn’t have the New York Stock Exchange as the center of the world’s stock market if we didn’t have a strong SEC,” emphasizing, “Even if people didn’t like the rules some of the time.”
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