What’s the Crypto Regulation Endgame?

Absent a crisis, stiffer regulation of cryptocurrencies could take many decades, especially given that major players are pouring huge sums into lobbying. But it probably won't take that long, because the crisis for private digital currencies is likely to come sooner rather than later.

CAMBRIDGE – With cryptocurrency prices plummeting as central banks start to raise interest rates, many are wondering if this is the beginning of the end of the bubble. Perhaps not yet. But a higher opportunity cost of money disproportionately drives down the prices of assets whose main uses lie in the future. Ultra-low interest rates flattered crypto, and young investors are now getting a taste of what happens when interest rates go up.

A more interesting question is what will happen when governments finally get serious about regulating Bitcoin and its brethren. Of the major economies, only China has so far begun to do so. Most policymakers have instead tried to by talking about central bank-issued digital currencies (CBDCs).

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