Cryptocurrencies and the National Bank Act: Learning the Wrong Lessons from History

Source: American Institute for Economic Research
by William J Luther & Nicolas Cachanosky

“The unregulated private sector failed to produce reliable claims in the past, [US Senator Elizabeth Warren (D-MA)] says; the government should step in to remedy the perceived shortcomings of privately-issued cryptocurrencies, as it did with its historical antecedents. There’s just one problem with this narrative: it is inconsistent with the historical record. The US experience does not show the dangers posed by an unregulated banking system. To the contrary, it clearly demonstrates the perils of poor regulation. Policymakers are learning the wrong lessons from history. … None of this is to deny that there were very real problems in the historical US banking system. US banks were notoriously unstable. But that instability was not due to unregulated wildcat banks. Rather, it followed quite naturally from terrible state-level regulations.” (11/03/21)