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HTLS 21: Cryptocurrency policy must be neutral, says economist Lawrence Summers

According to the leading US economist, it is expected that such a neutral policy on cryptocurrency will lead the economy to a “middle way” – which is more permissive than the entrenched financial interests that do not want to see this disruptive innovation.
Leading US economist Lawrence H Summers in conversation with Mint editor Sruthijith KK on Day 2 of the Hindustan Times Leadership Summit (HTLS). 
Published on Dec 01, 2021 07:55 PM IST
Written by Joydeep Bose | Edited by Amit Chaturvedi, Hindustan Times, New Delhi

Leading American economist Lawrence H Summers, who was also the former US Secretary of Treasury, on Wednesday said that government policy on cryptocurrencies must be neutral and not opposed to the emerging new form of innovation and technology. “Cryptocurrencies should be tested in the market on a level playing field,” said Summers, while speaking to Mint editor Sruthijith KK on Day 2 of the Hindustan Times Leadership Summit (HTLS).

Summers, who used to be the director of the White House National Economic Council from 2009 to 2010, said that cryptocurrencies are the “new means” of transaction. “There is no reason why it would be easier to launder money with cryptocurrency than with case,” he said. “There is also no reason why the blockchain should be opposed rather than more traditional payment routes.”

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“Therefore the principle should be neutrality,” Summers said, adding that this will enable a financial climate that is open to innovation. “There is no reason why I shouldn't be able to transfer funds to you using whatever technology I wish,” he said, pointing out that the aforementioned neutral policy is the central principle that will guide such marketing and finance-related decisions in the future.

According to the leading US economist, it is expected that such a neutral policy on cryptocurrency will lead the economy to a “middle way” – which is more permissive than the entrenched financial interests that do not want to see this disruptive innovation. In a similar manner, a neutral policy  should also be less permissible to “libertarians who want to see cryptocurrencies succeed not because it's overwhelmingly meritorious but simply by virtue of the fact that it enables evasion of a variety of traditional rules.”

Notably, the remarks were prompted by a question posed to the American economist about a cryptocurrency-related law that is in the works in India. While a bill in this regard is set to be introduced in the ongoing winter session of Parliament, it remains unclear how far the government's regulatory measure on these digital tokens will extend. While currency there is no regulation on the ban and use of crypto in the country, the upcoming Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, intends to prohibit all “private cryptocurrencies” while also making certain exceptions for the underlying blockchain technology.

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