Page 8 - May 2018 Disruption Report Flip Book

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Has the cryptocurrency market “become a farce”?
“It’s a clever idea that some people came up with, but now it’s being taken to ridiculous extremes,” Neel Kashkari, the president of the Minneapolis Federal Reserve. “The barrier to entry to creating a new cryptocurrency is zero. If you can dupe enough people to buy it, you can pretend that you’ve launched something. And you can say, ‘Look, I’m a billionaire because I sold you one. And I own the other 999 million of them, so that means I’m a billionaire! So it has become a farce...I’m seeing more noise and more fraud than I’m seeing anything useful.”
“Does that mean it’s always going to be a farce?” asked Kashkari. “No. There will probably be
a shakeout, and maybe a handful of these things will end up surviving. I don’t see Bitcoin as a credible competitor to the dollar in the United States of America, and the reason is the barrier of entry to you creating your own coin and me creating my own virtual currency is zero.” (CCN.com, 05/22/18)
Professor David Yermak, chairman of the finance department at NYU Stern School of Business, said:
What are your [regulatory] obligations ...report is very much a gray area and there are lots of different points of view. I think there are existing laws that certainly could be interpreted in one country or another that you would have reporting obligations. But I think the attraction of many of these assets is that either people believe that the authorities can’t see them or won’t take an interest in them or that, in fact, they’re so different from the underlying thing that they’re trying to mimic that maybe the same obligations don’t kick
in. There’s a lot that the regulators are going to have to do to catch up with this. It’s very challenging not just in Washington but in every capital around the world. You have a new form of digital instruments that just don’t fit well into the securities laws or the banking laws or the tax laws.
Even if you could write laws that capture these things—the way you chase them down in these virtual forms that they take in [and] the way you might enforce laws against them and punish the people in charge—it’s very difficult to see how that would work the same way. This stuff doesn’t exist physically; it exists in the cloud in virtual space. So I think if you’re looking to move money around the world and not see regulators knocking at your door when it exceeds $10,000, this is one alternative that might attract some people. It could also attract terrorists and all kinds of other people who want to move money without being detected.
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