The celebrated historian Niall Ferguson has issued a stark warning against crypto regulations and the attempts on the part of savage politicians to clamp down on the blockchain sector.
In a searing op-ed for Bloomberg, the Scottish-American academic slammed attempts to “strangle” the nascent industry, saying he was “depressed” to see “attacks on cryptocurrency by the custodians of the established order”.
The US Senate recently passed a bipartisan bill that includes a hugely controversial bid to define almost anyone working in crypto as a “broker”. The bill would force companies in the blockchain space to follow IRS reporting requirements by collecting user data, including names and addresses.
Ferguson, who is Milbank Family Senior Fellow at the Hoover Institution at Stanford University, warned that “restrictive regulation of crypto could turn out to be a very expensive mistake”.
He predicted the rise of an “internet of money” and said the “best strategy to preserve the dominance of the dollar is precisely to encourage the international adoption of dollar-linked stablecoins, rather than to stamp them out”.
“The winners of my boyhood have become the bloated incumbents of my middle age,” Ferguson wrote.
“The innovative energy has passed to the crypto bros, leaving the established banks and their friends in Washington scrambling to make the barriers to competition even higher.”
Ferguson also warned against plans to create a central bank digital currency, saying the “American way is to let innovation rip” and suggesting trying to compete with China to build a new cryptocurrency is “a mug’s game”.
“If we have learned nothing else from the past half-century, it is surely that the best way to win a race with totalitarian rivals is not to copy them, but to out-innovate them,” he continued.
The right-leaning historian rubbished “overblown” claims about the threat posed by crypto. He singled out Senator Elizabeth Warren’s suggestion that “shadowy super-coders” control the blockchain economy for particular criticism, likening her stance to the State Department’s unsuccessful attempt to ban cryptography in the 1990s.
The following lines from a speech given by Gary Gensler, chairman of the Securities and Exchange Commission, were also highlighted as examples of the wrong way to tackle crypto:
“Primarily, crypto assets provide digital, scarce vehicles for speculative investment. Thus, in that sense, one can say they are highly speculative stores of value. … We also haven’t seen crypto used much as a medium of exchange. To the extent that it is used as such, it’s often to skirt our laws with respect to anti-money laundering, sanctions, and tax collection. … Right now, we just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West.
“The use of stablecoins on these platforms may facilitate those seeking to sidestep a host of public policy goals connected to our traditional banking and financial system: anti-money laundering, tax compliance, sanctions, and the like. This affects our national security, too.”
The only politician whose stance Ferguson appeared to approve of was Senator Ted Cruz, who said that lawmakers should get to grips with crypto before hitting the sector with new rules and regulations.
“The Senate should actually take the time to try to understand crypto before even thinking of regulating it the way we’re doing,” Cruz wrote.
“Washington, D.C. is destroying people’s lives and livelihoods from a position of functionally complete ignorance.”
It looks like the crypto sector has a powerful new champion, although at the time of writing Professor Ferguson has not yet added laser beam eyes to his Twitter profile picture. There’s still time…