Former US Treasury Secretary Lawrence Summers has stated that the cryptocurrency industry should embrace government regulation for the sake of its own survival.
Summers explained in an interview that because large sums of money are at stake in crypto, it is unrealistic to expect the industry to operate without government oversight.
Summers, who previously served as World Bank chief economist, Secretary of the Treasury under former President Bill Clinton, and Director of the National Economic Council under former President Barack Obama, compared the crypto space to the airline and automobile industries, which would not be viable if not regulated.
According to the former US Treasury Secretary:
“When large sums of money are kept hidden, there is a risk of money laundering, a risk of supporting criminal activity, and a risk of innocent people being taken advantage of.”
“I believe the crypto community needs to recognize this and work cooperatively with governments, and if they do, the crypto community will benefit. This innovation, I believe, has the potential to be one of the most significant of this epoch.”
Countries are outlawing cryptocurrency due to a lack of regulation and risks.
After China announced a ban on all crypto transactions and illegal mining, threatening the trillion-dollar digital asset industry, the economist shared his thoughts on the benefits of regulating the crypto industry.
China has long been opposed to cryptocurrency, citing its links to illegal activities and excessive energy consumption, but it is not the only country that is opposed to digital assets.
Turkey has also prohibited cryptocurrency payments. Officials viewed the lack of regulation and the lack of a centralized authority as a risk for investors who may not be able to recover their losses.
India is also expected to introduce legislation to prohibit the use of private cryptocurrencies in the country. One of the motivations for the proposed legislation is the use of cryptocurrencies to fund legal activities.
Amid concerns about an unregulated sector, Summers stated that the crypto industry must abandon the notion that it will function as a “libertarian paradise” free of government regulations. He emphasized that regulations can protect not only consumers but also the broader industry.