Recently came the news that China has taken the umpteenth step to restrict cryptocurrencies. And earlier, CPB also called for measures to be taken in the Netherlands. Reason for the editors to submit the following statement to the Metro panel: ‘The Netherlands must ban cryptocurrencies’.
This time, EW columnist Constanteyn Roelofs, ING economist Teunis Brosens and crypto expert Peter Slagter comment on the statement.’ Leave cryptocurrencies on the internet, but don’t accept them as a general means of payment.
“Above all, the Netherlands just needs to clarify what cryptocurrencies are. On the one hand, it is mainly seen as a speculation game for boys who want to make quick money on the internet and drive each other crazy in app groups and via twitter accounts. But behind the technology that the entire cryptosystem revolves around – the blockchain – is a very anarchic idea to take control of the money out of the hands of the state.
I think that’s a bit special, because we’ve been in a system for at least a few centuries anyway in which the state regulates the economy by influencing the amount of money. The way we came out of the financial crisis of 2008 is, for example, by pumping a lot of money into the market. That’s just such an essential tool of the government to keep a country livable and productive. That’s why I can imagine countries thinking: ‘Let’s not do those cryptos, because then we will lose an important tool to keep the economy on track’.” ‘Don’t look at a model of Chinese state coercion’
“The main question is whether Bitcoin and other cryptocurrencies are now digital coins or ordinary coins. Ultimately, they are intended to be able to trade other economic matters with them. You could also think of Bitcoin as the national currency of the internet, although the internet is not a state, but simply a distributed system. I would say: leave cryptocurrencies on the internet, but do not accept them as a general means of payment with which you can also pay your tax or parking fines, for example.
In any case, I do not think that the Chinese state coercion and control drive is a model that we should look at. Certainly not because many freedoms are already under pressure due to the corona measures. I also don’t see how you could ban cryptocurrencies. It’s a bit like disco coins: if you agree with other people to exchange your dollars for digital tokens, there is little you can do about it.” You shouldn’t want to push this pace of innovation away.
“I don’t think it’s a good idea to ban cryptocurrencies, but I do understand where the call comes from. Sometimes things go wrong in cryptoland, there are people who have lost their money to nonsense coins. I do not think banning is a good plan for two reasons.
Firstly, it does not seem to me to be the way to solve problems. There are thousands of different cryptocurrencies in circulation and probably it is only a very small percentage that really has a long-term future or in which there is a certain innovation that is worthwhile. The rest ranges from good attempts at jokes and tricks to knock money out of people’s pockets. The crypto world is actually a kind of laboratory for financial services. Nobody really knows how that field will develop, but on a technical level there are very interesting innovations taking place. You shouldn’t want to push that pace of innovation away.
The abuses on the crypto market must of course be regulated. But let that be exactly what the European Commission is doing, in order to protect consumers and provide clarity to crypto companies.” ‘Difficult to ban things on the internet’
“The second reason I don’t like banning is that you’re not going to succeed. We are not China here, with a great firewall around our internet. In any case, it is therefore difficult to ban things that happen on the internet. Take online casinos: they were forbidden in the Netherlands for a long time, but anyone who runs such a company from an island somewhere in the Pacific Ocean can continue to offer such a thing. This is also the case with crypto, but then even a degree more difficult, because it is a decentralized technology. That is a major problem for regulation, which addresses companies at the physical address where they are registered. But decentralized technologies are not registered at a physical address. The regulation does not yet have an answer to that.
Yet I do not believe that governments and central banks will let it get to the point where Bitcoin or other cryptocurrencies will pose a serious threat to the euro. We have already seen an example of this. When Facebook announced that it would come up with a cryptocurrency, there were two reactions from the European Central Bank: first Facebook was told that such a currency is not possible and then the European Central Bank announced its own digital currency.” With a ban you are completely embarrassing yourself on the world stage.
“I am absolutely opposed to the statement. Especially because a ban on cryptocurrencies will get in the way of one of the most innovative sectors. With this you not only put yourself further at a distance, but also completely embarrassed on the world stage.
Incidentally, I want to get rid of the fact that China has now really opted for a total ban on Bitcoin. The entire recent coverage of this is based on one piece by Bloomberg. But that piece isn’t quite right. They say that there has been a total ban without naming a source, and in the reference to the Chinese central bank there is nothing to be found about it. The message is based on the same Chinese memorandum that has been circulating since 2013 and is repeated over and over again – albeit always shrouded in stricter language. So it is not the case that something new has been announced in terms of content.” ‘Forbidden activity moves to another place’
“Now the Chinese tone is so strict that some crypto companies have chosen eggs for their money and no longer facilitate transactions with the interior of China. But if you forbid something, then of course that activity moves elsewhere: out of sight or peer-to-peer in this case, for example. The possession of cryptocurrency is still legal in China and Chinese people can still send cryptocurrency to each other.
Elsewhere, there is no ban on cryptocurrencies, but regulation of them. In fact, you also give it a legal status, because then you will look at how people and companies can use cryptocurrency. For cryptocurrencies, the same tools are used as those used to regulate other financial products and therefore the market will further professionalize. The main question is which regulatory framework will be outlined in the future.
When it comes to protecting consumers from the dangers of cryptocurrencies, I would say that not only for cryptocurrencies, but for all financial products, there are still significant steps to be made in consumer protection. Financial literacy, for example about how risk and return play with each other, is quite substandard across the board. But whoever picks out Bitcoin and reduces it to a pyramid scheme, is mistaken and throws the baby out with the bathwater. Where the internet provided low-threshold communication on a global scale, I think Bitcoin will play that role for money.”
Every week we present a wide range of panel members from the Metro panel with a statement that responds to current events. Every Thursday you can find different opinions, interesting quotes and substantiated points of view on metronieuws.nl/metro-panel.