Harvard Professor of Economics and former Chief Economist at the International Monetary Fund (IMF) Kenneth Rogoff believes that governments will not allow bitcoin to flourish on a large scale. “The regulation will come in. The government will win,” he said. The professor also discussed the likelihood of a bitcoin bubble.
Harvard Professor Warns of Strict Crypto Regulation
Harvard University Professor Kenneth Rogoff shared some thoughts about bitcoin regulation during an interview on Bloomberg Surveillance last week. Rogoff is the Thomas D. Cabot Professor of Public Policy and a professor of economics at Harvard University. He also served as Chief Economist at the International Monetary Fund (IMF) from 2001–2003.
“It’s speculative,” he began. “I’ve been a bitcoin skeptic and certainly the price has gone up.” However, Rogoff argued, “there’s sort of an ultimate question of what’s the use. Is it just valuable because people think it’s valuable? That is a bubble that would blow up.”
He continued: “I can see bitcoin being used in failed states. It’s conceivable it could have some use in a dystopian future.” Nonetheless, he emphasized, “I think the governments are not going to allow pseudonymous transactions on a big scale. They’re just not going to allow it.” The Harvard economics professor elaborated:
The regulation will come in. The government will win. It doesn’t matter what the technology is.
“So, I think over the long run if there’s not a use, the bubble will burst. I hope there’s not such a valuable use but I suppose it’s a hedge against dystopia,” he further opined.
Rogoff was then asked, “would you advise Secretary Yellen at Treasury that the U.S. should be proactive in instituting that regulation which could collapse the price of cryptocurrency?”
He simply replied: “Yes, that’s just true across the board. It needs to be regulated … I think governments are on it. It’s not being used that widely and I suspect although the bitcoin lobbyists have been successful in getting it in some places, that won’t last.”
Rogoff has long been a bitcoin skeptic. In 2018, he told CNBC that the cryptocurrency was more likely to be worth $100 than $100K a decade from then. “Basically, if you take away the possibility of money laundering and tax evasion, its actual uses as a transaction vehicle are very small,” the former IMF chief economist said.
Last week, Joe Biden’s pick for the U.S. Treasury Secretary, Janet Yellen, stated that cryptocurrencies are mainly used for illicit financing. She later softened her stance slightly and promised to work with the Federal Reserve Board and other regulators to implement an “effective” crypto regulation. A week prior, the president of the European Central Bank (ECB), Christine Lagarde, called on countries to regulate bitcoin, claiming that the crypto has “conducted some funny business” and some “totally reprehensible money laundering activity.” Despite regulators’ belief, an industry report found that in 2020 crime accounted for only 0.34% of all crypto transactions.
Meanwhile, several U.S. lawmakers have said that governments should not try to stop bitcoin. Rep. Patrick McHenry previously said:
Due to the nature of the technology of Bitcoin, governments cannot kill it, nor should they.
Furthermore, the U.S. now has a bitcoin-friendly lawmaker. Senator Cynthia Lummis has vowed to ensure Congress understands that bitcoin is a great store of value. She is a hodler, who believes that bitcoin “has shown great promise and may rise as a viable alternative store of value to the U.S. dollar both on the institutional level and the personal level.