In the weeks following the FTX crash, calls from the financial industry to regulate cryptocurrencies have grown louder. The supporters believe that this thing that looks like securities, commodities, and banking products should be regulated and supervised by a special agency, so as to be responsible for consumers.
However, economist and Brandeis International Business School professor Stephen Cecchetti pointed out that cryptocurrency is like the World of Warcraft economy (the game has 120 million players, although money is involved, but there is no US federal financial regulator to oversee World of Warcraft) , legalizing it through regulation will only harm the financial system.
Since cryptocurrencies do nothing to support the real economy, legalizing them would only drain creative resources from productive activity. Not only that, the economist also believes that the development of regulations specifically for cryptocurrencies will encourage banks to directly purchase encrypted assets and provide loans as collateral, thereby affecting the traditional financial system. The best way is to do nothing. Let cryptocurrencies evolve on their own.