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Governments Need to Stop Dismissing Crypto as Illicit Payments and Reckless Speculation, Says El-Erian

Cryptocurrency
02.08.2021
96
Governments Need to Stop Dismissing Crypto as Illicit Payments and Reckless Speculation, Says El-Erian

Mohamed El-Erian, an adviser to Allianz and Gramercy Funds Management, says that “The time has come for more western governments to stop dismissing the crypto revolution as some mix of illicit payments schemes and reckless financial speculation.”

Western Governments Urged to Stop Ignoring Crypto Revolution

Mohamed El-Erian, president of Queens College, Cambridge University, has urged the crypto world and western governments to cooperate.

The Egyptian-American businessman is also chief economic adviser at Allianz, the corporate parent of PIMCO, one of the largest investment managers, where he was CEO and co-chief investment officer. Last year, he was also appointed chair of Gramercy Funds Management, a dedicated Emerging Markets investment firm.

In an opinion piece which he authored in the Financial Times published Thursday, El-Erian wrote:

The time has come for more western governments to stop dismissing the crypto revolution as some mix of illicit payments schemes and reckless financial speculation.

“Instead, they should be more open to embracing the innovations of crypto and channeling them in a better direction for finance, the economy, and society at large,” he advised.

In an interview with Yahoo Finance Friday, he elaborated on this topic. “Both the crypto world and governments need to come together and talk a common language,” he began. “We have in the crypto revolution really important innovations that have to do with the payment system. And, we have to take that seriously.”

He continued: “Why do we have to take it seriously? For two reasons. One it can make financial intermediation more efficient. Second, if we’re not careful, China, which is taking a very top-down approach may start defining the agenda.”

The advisor also said that crypto supporters need to deepen their engagement on regulatory and energy issues. “They need to shift away from a ‘zero-sum’ mindset where their gains can only come from the losses of the established financial system,” he suggested, noting:

Absent a more co-operative approach, both sides of the crypto world in the west may find their future being determined by what a faster-moving China is doing and intends to do.

El-Erian advised that the crypto world “has to take seriously concerns about illicit payments, concerns about money laundering, and concerns about energy use.”

Since many governments, including the U.S., are skeptical about cryptocurrencies, he explained that there are two risks if governments and the crypto world do not cooperate. The Allianz advisor detailed:

The internal risk is that the government will see greater adoption by the private sector. We are seeing it every single day, so it’s not something that’s going to disappear. The second more important issue is that China is not waiting.

Noting that China has already decided what digital money should look like, El-Erian warned: “It [China] has decided it should have a top-down approach and it has decided that it wants to export its approach. Why? Because it gives it access to payment platforms regionally. It gives it access to data. So we have to take it seriously otherwise we are going to lose the narrative completely.”

Do you agree with Mohamed El-Erian? Let us know in the comments section below.

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