Professor of Economics at Cornell University, Eswar Prasad, has raised warnings about the long-term prospects of cryptocurrency. Prasad has said that cryptocurrencies have a very high chance of disrupting monetary systems and negatively affecting financial stability. Prasad was formerly the chief of IMF’s China division. Few people will doubt the depth of his knowledge of economics. Coming from such an authoritative figure, it is causing worry to some crypto investors.
However, it is worth noting that this is not the first time institutional economists and academics have spoken against crypto. Prasad gives a lack of regulations as the primary reason for crypto’s negative influences over the long term. In this context, many investors feel that it is nothing but an attempt of putting additional pressure over the crypto community to open up on regulations.
Crypto regulations are one of the most controversial subjects in the world today. While many feel that regulations go against the basic nature of cryptocurrency, others feel that having well-designed regulations will encourage more people to enter the sector. Crypto-related financial frauds are also a big concern for both the crypto community and regulators. As long as this financial system is not under regulatory pressure, money laundering and scams involving crypto will continue to grow. For instance, the United Kingdom reported a loss of over $200 million to crypto-related frauds.
Prasad’s chief concern seems to be the lack of investor protection in cryptocurrency. However, Prasad has mixed opinions on CBDCs. While on one hand, he supports the idea of CBDCs, he is also worried about the surveillance power it would give to the governments.