It has to be asked: if crypto is "worth nothing" then why should it be regulated?
It's a bottle imp. [1] While it is fundamentally worthless, it relies on irrationality to create price in lieu.
A ponzi scheme in itself isnt illegal (which is why there are so many crypto ponzi schemes) - it is when it is considered securities fraud that it becomes illegal.
The thought is that by regulating cryptocurrencies (i.e. treating it as a similar asset class as stocks, commodities, etc), such "investments" would be subject to the same rules - whether it has any real inherent value or not is irrelevant.
So, serious question for people who argue that Bitcoin deserves a special class of regulation: what differentiates Bitcoin and Netflix here?
I don't think Bitcoin has anything like that - its ledger is public, yes. But the important part, where fiat currency is turned into Bitcoin or vice versa... that is opaque, for the most part. This is a very big difference, in my mind.
I don't think that Netflix itself has a responsibility to report the flow of fiat currency into and out of Netflix, certainly not in a timely enough way to prevent people from being burned by the outflow of capital from it (as, indeed, has happened this year). The stock exchanges themselves provide visibility into that.
You seem to be hinting that there's a natural limit to what we "can" do for any given security. I don't think that's true: it's just all tradeoffs. Could a regulator have tried to stem the losses people experienced from Netflix? I mean, sure. They could've halted trading on Netflix. They could've artificially bought up Netflix's stock.
I don't think they should have done all that. The costs would have been extreme. But if you're all in on, "we did what we could," then I think the ball's in your court to describe exactly where the limits of that doctrine lie.
That's the point of this whole thread: whenever you get crypto haters on these fora, they act like crypto is the only volatile asset that has no effective price floor. But in fact, there are loooooooooooots of assets that are volatile and have no effective price floor.
Are those assets dangerous to invest in? They sure are. I don't invest in crypto and I don't invest in Netflix, either.
But do those many other assets that are volatile and have no effective price floor draw all this apocalyptic talk and complaints? No, they don't. They may draw entirely reasonable discussions of the value of not investing all your eggs in one basket. Which suggests to me that all the hate that crypto draws is not in fact because they're volatile and have no price floor -- that's a smokescreen for people who, generally, are in some combination of: a. don't like the politics of some people involved in crypto, or b. are pissed off that they spent a decade saying that crypt was going to crash any day now and have been consistently wrong.
Crypto is not a circular economy. It's a speculative investment whose expected return is always negative.
The point remains: someone spending $USD to acquire $<Crypto> should expect to lose $USD when they invariably want to sell their tokens for $USD later. Casino chips are also a negative-sum game, even though a loan shark may loan you some for interest.
Governments and regulators are worried about it because when enough people invest their life savings in crypto, and it disappears, that's real capital that is gone from the existing banking system. Fractional reserve banking enables banks to use money they hold in deposits to fund large projects, loans, and invest (with plenty of regulation about how much money they must hold in reserve to ensure customers can always withdraw their funds).
If enough people lose their shirts then it starts to have serious effects on an economy.
How big is the fraud number for USD or Euros? Billions per month?
I'm sorry but it's asinine to compare securities and currencies, and straight-up whataboutism.
You can create security instruments out of crypto, but that is not the same thing.
Banking is regulated to prevent these sorts of things. Crypto is designed to enable them. They need to be regulated.
I think as usual government just wants another thing to tax and control.
What Lagarde is saying is that this stuff needs to be regulated before too many people lose their shirts. So far these "crypto assets" have demonstrated no value. Many folks are dumping their life savings into these schemes and losing everything. If enough people lose everything houses foreclose, debts go unpaid, inflation goes up.
The same thing was done every time the grifters tried it in traditional currencies. Too many people lost their shirts, government stepped in, we changed the rules and added regulation, and people get better protection. The crypto space is speed-running through all of these scams. What they're doing isn't new, it's all been done before.
Kim Kardashian and Floyd Maywether are being sued for shilling Ethereum Max (lol) [1]
Quentin Tarantino for NFTs re Pulp Fiction.
Jake Paul of course, with his Dink Doinks.
Nick Carter, Ben Phillips, Soulja Boy and Lil Yachty re: Safemoon.
Need I go on?
[1] https://www.cnbc.com/2022/01/12/kim-kardashian-and-floyd-may...
We both know that banning all of them is not going to happen. Is that why instead of that, they are putting in AML, KYC, etc regulations and more for these crypto exchanges?