Regulating Cryptocurrencies A Bad Idea Say Economists

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Deputy minister Eddin Syazlee Shith says the Securities Commission currently offers guidance to cryptocurrency investors. (Rawpixel pic)PETALING JAYA: Two economists have backed Putrajaya’s decision to refrain from regulating cryptocurrencies, with one saying it would be an onerous undertaking and the other welcoming the challenge to a government monopoly.
Geoffrey Williams of the Malaysia University of Science and Technology said regulators would find themselves constantly chasing errant traders since cryptocurrencies were private assets generated in unregulated global markets.
“Also, enforcement of regulations internationally will be virtually impossible,” he said.
Carmelo Ferlito.Carmelo Ferlito, chief executive of the Center for Market Education, said a free market for currencies would emerge if cryptocurrencies became more accepted than government issued currencies.
He told FMT: “The greatest miracle of cryptocurrencies is not in their speculative nature but in the fact that they challenge the government monopoly on currency emission.
“My hope is that more businesses and consumers will accept crypto as a means of exchange so that it dismantles the government monopoly over currency emission and we can move towards a more stable and less inflationary currency.”
There were commenting on a statement by deputy minister in the Prime Minister’s Department Eddin Syazlee Shith that the government had no immediate plan to regulate cryptocurrencies because laws to control the trade would be difficult to enforce.
In October, the Securities Commission said more than RM16 billion in digital assets and cryptocurrencies were traded in Malaysia between August 2020 and September this year.
Geoffrey Williams.Williams said it was tempting to legitimise cryptocurrency as it could be a source of new business and opportunities if regulated well, but he noted that there were no basic features for a properly functioning market.
“There is imperfect information between buyers and sellers, the rule of law is not clear or clearly enforceable and scamming and criminal activities are common,” he said.
He also said potential new businesses or financial opportunities were highly risky as regulating was costly and complex.
“If Malaysia is seen as a hub for this and the regulation fails, it will be hugely damaging to the reputation of Malaysia in financial markets.”
He said Malaysia should not follow the examples of Cuba or El Salvador, which have recognised cryptocurrency as a legitimate currency.
“They are only concerned with business and finance in any form irrespective of cost or risks,” he said. - FMT

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