On March 9, the Biden administration issued an executive order directing U.S. regulators to “assess the financial stability risks and regulatory gaps posed by the ongoing adoption of digital assets” and to recommend specific policy, regulatory and legislative actions within 180 days.
Many in the crypto industry are celebrating that order as a call for careful, well-researched regulations as opposed to a hasty and clumsy rush to judgment. Such enthusiasm, however, may be premature.
Thomas L. Hogan is senior research faculty at the American Institute for Economic Research (AIER). He was formerly chief economist for the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
The heads of the U.S. regulatory agencies already claim to conduct careful analysis that weighs the costs and benefits of new rules before putting them into effect. Federal Reserve Chairman Jerome Powell, for example, described cost-benefit analysis as “a very fundamental part of what we do.”
Yet evidence from existing regulations contradicts such claims. It suggests that a careful approach to the regulation of cryptocurrency is highly unlikely.