The former Director of the FDIC (Federal Deposit Insurance Corporation) argued that bitcoin shouldn’t be banned because of its “lack of intrinsic value.” In an opinion piece for Yahoo Finance, Shelia Bair pointed out that bitcoin is a bubble, given its meteoric rise this year, and that it’s hard for regulators to know what to do given that they “know people are going to lose a lot of money.” However, Director Bair correctly pointed out that virtually all money has historically depended “more on psychology than physical attributes.”
In the op-ed Ms Bair wrote: “Since the beginning of commerce, humans have assigned value to things of no readily-apparent intrinsic worth. Particularly in the case of mediums of exchange, aka currency, we assign value simply because those with whom we transact do so as well.”
Director Bair also praised the Commodity Futures Trading Commission (CFTC) on its work pressing both CBOE and CME, first US exchanges trading Bitcoin futures to institute information sharing with cryptocurrency exchanges. She also gave kudos to the Securities and Exchange Commission’s (SEC) work, proactively protecting investors against Initial Coin Offering (ICO) scams.
Perhaps her most controversial views were that all crypto exchanges should be regulated: “Most bitcoin exchanges are not subject to the same level of regulation and reporting requirements applicable to banks to screen customers and detect and report suspected instances of illicit financing. They should be.”
In closing Director Bair penned that Bitcoin isn’t the “first market mania, nor will it be the last.” As such, she urged investors not to put in more than they can afford to lose, to do their homework, and to keep in mind the cryptocurrency’s price can fall in a flash.