J. Christopher Giancarlo – America’s leading authority on Cryptocurrency and the coming digital economy – has just released his new book, CryptoDad: The Fight for the Future of Money (https://www.amzn.com/111985508X/).
CryptoDad is engaging and destined to have great impact. Even the footnotes are superb! The book adds depth to the many vectors influencing the future of cryptocurrencies and regulation.
Chris Giancarlo is the former Chairman of the CFTC – first nominated as a CFTC Commissioner by President Barack Obama and subsequently nominated as Chair by President Donald Trump. He is the founder of the new Digital Dollar Project (https://digitaldollarproject.org/), which is committed to advancing the exploration of a United States Central Bank Digital Currency (CBDC). Over the years, he has done pathbreaking work at the intersection of regulation and financial innovation.
In an International Monetary Fund (“IMF”) blog post, IMF senior executives warned of the risks to financial stability from “cryptoization.”
The executives reported that the value of the crypto asset market increased tenfold from early 2020 to September 2021, even though many of the industry’s intermediary entities (e.g., miners and exchanges) lack “strong operational, governance, and risk practices.” They noted the substantial disruptions experienced by crypto exchanges during times of market turmoil, as well as a number of “high-profile” hacking incidents that resulted in stolen customer funds. While such incidents have not significantly affected financial stability, they argued, the crypto industry’s growth poses significant consumer protection risks.
In addition, the executives noted the money laundering, tax evasion and terrorist financing risks arising from the data gaps associated with the “(pseudo) anonymity” of crypto products. They stated that international regulatory collaboration is critical to crypto market regulation because the majority of crypto exchange transactions take place “through entities that operate primarily in offshore financial centers.” They also expressed concern regarding the risks to implementing monetary policy effectively that may result from the widespread use of cryptocurrencies.
To address issues arising from rapid crypto industry developments, the executives recommended that regulators (i) promptly take action to reduce data gaps, (ii) improve cross-border collaboration to reduce the risk of “regulatory arbitrage” and maximize supervision and enforcement efforts, (iii) implement current international standards that are applicable to crypto assets, including with respect to securities regulation, (iv) assess the benefits of adopting a central bank digital currency and (v) prioritize making cross-border payments more economical, efficient, transparent and widely available through the G20 Cross-Border Payments Roadmap.
For all of the concerns that the U.S. and global regulators have expressed regarding digital assets, there has been disappointingly little focus on distinguishing among the different types of digital assets. A “trust” currency such as Bitcoin raises very different issues from a stablecoin that is fully supported by U.S. dollars in a U.S. bank (assuming, of course, that the dollars are there). These assets are different from digital assets that represent ownership of a company and likewise different from utility tokens. The resort to proclaiming that all of these assets should be regulated as securities has the benefit of simplicity, but it is not correct (at least under U.S. law), and it will make impossible a good number of the legal uses for which digital assets are well suited.
Today, Barron’s published an op-ed by CFS senior fellow David Beers titled “Democracy is at Stake in the U.S. Debt Fight.”
David discusses the ongoing struggle with deficits and the debt ceiling within the context of Standard & Poor’s (S&P) decision to become the first major credit rating firm to downgrade U.S. debt. At the time, David led S&P’s global team of analysts responsible for sovereign and international public finance credit ratings and research. He later worked on sovereign debt, IMF, China, and Euro Area policy issues for the Bank of England.
As noted in the piece, the opinions are the author’s alone.
Many points are worth further exploration, yet some may be viewed as political. CFS focuses on analytics. CFS is nonpartisan. Hence, we leave the politics for you to sort through.
The op-ed is excellent. It clearly illustrates drivers behind the deterioration in sovereign credit quality in the U.S. as well as other sovereigns around the world. In fact, going forward, economic management with a keen eye to these drivers can reverse the slide in credit quality.
To view the full article:
We look forward to any comments you might have.
Today we release CFS monetary and financial measures for August 2021. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.4% in August 2021 on a year-over-year basis versus 3.9% in July.
For Monetary and Financial Data Release Report:
For more information about the CFS Divisia indices and the data in Excel:
Bloomberg terminal users can access our monetary and financial statistics by any of the four options:
1) ALLX DIVM <GO>
2) ECST T DIVMM4IY <GO>
3) ECST <GO> –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY <GO> –> From source list on left, select ‘Center for Financial Stability’