Abstract The United States (US) and European Union (EU) have opted to extend the regulatory perimeter to incorporate crypto-related activities. This risks the integrity and stability of the financial system. Defining features of the crypto world are fraud, theft and facilitating criminal activity; so far at least, it does little to support the real (legal) economy. The risk is that by conferring legitimacy on crypto, regulation will increase the demand for crypto assets, entrench a highly volatile asset in traditional financial institutions, undermine market discipline, and increase financial instability.
John Thornton (Tue,) studied this question.