The explosion of interest in cryptocurrencies and the implosion of cryptocurrency exchange FTX shine a spotlight on the fact that today’s regulatory apparatus is ill-equipped to oversee this new financial technology. The Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the comptroller of the currency, and the Federal Reserve are all wrestling with how best to oversee crypto. Several proposals are circulating in Congress. One camp argues that the risks to consumers and to financial stability demand a new rulebook. Another argues that regulating crypto would give it legitimacy and that it would be best to leave it alone.
On December 20, the Hutchins Center on Fiscal and Monetary Policy and the Center on Regulation and Markets hosted a virtual debate on this timely issue. Peter Conti-Brown of Penn Wharton and a nonresident fellow in Economic Studies argued for regulation, and Stephen Cecchetti of Brandeis International Business School argued against.