Let Crypto Burn.
By Kim Schoenholtz and Stephen Cecchetti
In the aftermath of the collapse of FTX, authorities should resist the urge to create a parallel legal and regulatory framework for the crypto industry. It is far better to do nothing, and just let crypto burn.
Actively intervening would convey undeserved legitimacy upon a system that does little to support real economic activity. It also would provide an official seal of approval to a system that currently poses no threat to financial stability and would lead to calls for public bailouts when crypto inevitably erupts again.
Finance is all about trust. The loss of trust from surging failures already is bringing about crypto’s demise. The market capitalisation of the myriad “coins” is down by about 75 per cent from its November 2021 peak.
Read the full Financial Times article.
Kim Schoenholtz is Henry Kaufman Professor of the History of Financial Institutions and Markets and Director of the Center for Global Economy and Business