We Should Not Directly Regulate Cryptocurrency
Government official and academic Landau consciously compares “technological” and “financial” innovation in the report, which runs to over one hundred pages. Some of the conclusions may come as a surprise to industry commentators, Landau arguing that over-regulation of cryptocurrency would constitute a “three-pronged danger.”
“Direct regulation is not desirable as it would oblige us to define, classify and therefore constrict objects which are essentially fluid and still unidentified,” he wrote in a summary section on cryptocurrency. The report continues:
“The danger is three-pronged: that of freezing the rapid evolution of technology in legislation, that of failing to grasp the real nature of the object we intend to regulate and that of pushing innovation towards regulatory avoidance. On the contrary, regulation should be technologically neutral, and in order to become so, address the actors and not the products themselves.”
Elsewhere, Landau advocates “minimal principles of transparency, integrity and robustness” for cryptocurrency exchanges, something which European lawmakers are reportedly considering as part of what is known as a ‘Euro-Bitlicense.
The report further contains several instances where financial and technological innovation are differentiated, Landau adopting a cautious tone.
“We must dissociate technological innovation –– which we should encourage and stimulate –– from monetary and financial innovation, which should be considered with care,” he wrote, continuing:
“In the current phase, the correct approach would be to let cryptocurrencies – and the innovations they bring – develop in the virtual realm that they occupy, but in parallel we need to avoid and confine any contagion.”