Letter: Here are two steps to reform cryptocurrencies

Published in the Financial Times.

Your editorial “Crypto’s rise requires a global response” (FT View, February 21), which backs the US Financial Stability Board’s proposal for “accelerated monitoring”, is good as far as it goes. Yet when it comes to stablecoins, there is another simple and obvious reform that needs to be made immediately. Whether you think stablecoins are more like a bank, a money-market fund or an exchange traded fund, the indubitable fact is that they are putting their liabilities as assets into the hands of the public. Like everybody else who does this, they need to publish full audited financial statements. Of course the statements would also include their profit and loss statement. This is a minimum requirement for the public to have an idea of what they are buying. A second simple requirement would be the publication of a clear description in plain English of the conditions and processes to redeem each stablecoin, since they all make so much of their “stable” character, and that stability depends on what happens when you want out. By all means, keep monitoring along with the Financial Stability Board, but get these two steps done in the meantime.

Alex J Pollock

Senior Fellow, Mises Institute

Auburn, AL, US