Carnegie Mellon University
December 06, 2021

Christin featured in Bloomberg on cryptocurrency regulation

Engineering and Public Policy Associate Professor Nicolas Christin was featured in Bloomberg in their article, The Fight to Control the $2 Trillion Crypto Market Is Heating Up

China rattled financial markets by announcing that all crypto-related transactions will be considered illegal. The country aims to launch its own cryptocurrency, joining 81 other countries exploring similar moves. “For China, I think it’s pretty clear they want to promote the digital yuan, and that they are simply taking care of the competition,” said Nicolas Christin.

Governments crack down on crypto for one of two reasons says Matt Hougan, chief investment officer at Bitwise Asset Management. They want to curb crypto mining — the energy-intensive computing process involved in creating the digital currency and verifying transactions. And second, perhaps more critically, they want to be able to monitor currency transactions and negate any challenge to their homegrown digital currencies.

However, Nicolas Christin says that the US is taking a different regulatory approach. According to Christin, the approach is aimed at trying to avoid problems. For example, financial markets have historically held up high barriers of entry for certain types of transactions, but no such stringent controls are in place for cryptocurrency trades. That leaves the door open for inexperienced investors to take highly leveraged positions that could lead to potentially catastrophic financial losses.

“Now of course there is a line of thought that people should be able to do whatever they want — after all, it’s their money,” Christin said. “But the question is whether a lot of retail-level folks engaging in these markets are actually equipped to judge the risks rationally, as opposed to engaging in gambling-like behavior.”

Read the full article to learn more about the regulation of cryptocurrencies.