Joseph Stiglitz, a Nobel Prize economist, has heavily criticised cryptocurrency, even going as far as to say there needs to be efforts to “shut them down”.
The 76-year-old professor, academic, economist and public policy analyst made the remarks in an interview to CNBC. Whilst he made it clear he is in favour of developing and implementing a digital money system, he stated he does not believe that cryptocurrencies are a good example of this.
“I’ve been a great advocate of moving to an electronic payments mechanism. There are a lot of efficiencies. I think we can actually have a better regulated economy if we had all the data in real time, knowing what people are spending,” he said in the interview.
He added that fiat currencies were run in a “very stable way” and that there is “no need for anyone to go to a cryptocurrency”, then stating that he believes they should all be shut down.
His reasons for his tough stance on crypto is due to the lack of control and regulation which he believes are extremely dangerous for the economic development of society. Stiglitz explained that at at the present time, there are not enough ways or means to efficiently trace funds and that using cryptocurrencies was an easy way of engaging in money laundering and tax evasion.
The economist seemed to ignore the fact that these issues have, and continue to present themselves on a daily basis and that an estimated $2 trillion of fiat currency is laundered every year. An additional $200 billion is lost to corporate tax evasion, and up to $240 billion is lost to income tax evasion, globally every year.
He continued to explain that crypto concerned him due to the fact that users were “moving things off a transparent platform and into a dark platform” and noted that his research showed him that an increasing amount of global wealth was being stored in these so called “dark platforms”.
Whilst he may have a point- a recent survey by DeVere found that 70% of HNWIs hold crypto investments- this would only really impact banks that make tremendous profits in interest and by utilising the funds that are stored with them.
Furthermore, his “dark platform” comment is missguided as blockchain is significantly ore transparent and auditable than any traditional banking process or operation. Movements and transactions are there for anyone to see at any time, and whilst there are illicit platforms, the same can be said for fiat currency as well.
Whilst Stiglitz may be calling for crypto to be shut down, the reality of this happening is very unlikely. The fact that cryptocurrencies are decentralised in nature, means it is literally impossible for a government or any central authority to prevent the network from functioning. In addition to this, the anonymity afforded by such technology serves as an additional layer of protection for those who wish to continue using them, even if the authorities decide to try and crack down.
Despite Stiglitz’s comments, the crytpo market has continued to surge today- showing absolutely no sign of slowing down, let alone being “shut down”. At the time of writing, the total market cap had exceeded $185 billion and Bitcoin was hovering just below the $6000 price point.