Common sense rules can cure cryptocurrency’s curse
By Karen Petrou
Nothing in rule or law prevents any of us from taking our wages and asking the dry cleaner to hold on to them for us because we always get our shirts back. Even if the dry cleaner is closer, we go to the bank because money really matters and we take for granted that any money we deposit at a bank is money we get back. Federal Deposit Insurance Corp. (FDIC) insurance solves the information asymmetry that would otherwise make it hard for most of us to know to whom to entrust our funds, and rules on banks back up this federal promise. This all may seem obvious, but it proves a long-forgotten axiom — rules build deep, trusted markets. This we need to remember as battles wage over the Basel Committee on Banking Supervision’s proposal to apply tough safety-and-soundness standards to crypto-asset exposures.