The collapse of FTX is pushing US lawmakers to regulate the crypto industry. However, one of the prominent American economists questions this point of view, believing that such actions can cause more severe damage to the economy.
Brandeis University of Massachusetts International School of Business Stephen Cecchetti compares the cryptocurrency market with World of Warcraft, an online game popular with millions of users.
“The strongest argument, I think, against regulation is the discussion of legitimacy. The cryptocurrency market has nothing to do with the real economy and rather develops in parallel with traditional financial institutions,” the scientist said at a crypto debate held by Brookings University.
According to the expert, the industry resembles the system in the online RPG World of Warcraft, where there are about 120 million players and their own economy. Cecchetti points out that the positive thing about World of Warcraft’s in-game economy is that there is no financial regulator. No one, including the developers and publishers of the game, would want any additional oversight of the players.
According to the professor, the regulation of the crypto industry carries additional and not so obvious risks: legitimization and excessive regulation will lead to the depletion of “creative resources” and reduce productivity. Simply put, the legal and regulated status of crypto projects will not encourage innovation.
According to Cecchetti, regulation will change the way banking works. Banks will become increasingly involved in the crypto industry. On the other hand, if no restrictions are introduced at all, then the crypto world, as now, will not have a significant impact on the real economy.
The fact that decentralized financial solutions do not need any regulation was previously stated by the head of the Coinbase exchange, Brian Armstrong.
Source: Bits
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