In “Sick Stablecoins Can’t Infect Financial Markets” (op-ed, June 13), Niall Ferguson and Manny Rincon-Cruz are narrowly focused on the here and now. Having handled the collapse of more than 1,000 banks and thrifts ourselves at the Federal Deposit Insurance Corporation and Federal Savings and Loan Insurance Corporation, we believe that policy makers should be focused on what will happen if cryptocurrency continues to grow in an unregulated fashion throughout the world.
Crypto already has an estimated global footprint of $10 trillion when considering direct amounts issued, derivative crypto instruments and leverage created to purchase those instruments. If crypto continues to penetrate financial and banking markets, the loss of confidence from the inevitable crash-of an instrument that often has no intrinsic value as well as its contagion impact could be devastating.
Is crypto about to crash the U.S. banking system today? No. Will it cause massive problems if allowed to continue spreading without proper regulation and controls? Bet on it.