Karen Petrou: Why Crypto Rules Could Prevent Crypto Chaos
FedFin’s in-depth analysis of the Basel Committee’s cryptoasset proposal kicked up quite a fuss.  The major point of contention is our conclusion that the new approach might recast crypto in favor of regulated banks.  Some said instead that the new capital requirements are punitive to the point of prohibitive.  However, a close read of the consultation persuades me that, despite the need for refinements in several critical places, crypto counterparties outside the lure of illicit finance or high-flying speculation will prefer doing business with a bank and that the new rules make it possible for banks to do business with them.  After all, each of us can always give our money to any person or business to hold for us; we instead deposit our money in the bank because, thanks in good part to FDIC insurance and the rules it requires, we know we’ll get our money back.