Economic policy experts met at AEI on Monday to discuss the regulatory challenges that bitcoin and other cryptocurrencies pose.
Alex J. Pollock of the R Street Institute started by providing the historical context in which cryptocurrencies have gained popularity. Clemson University’s Jerry Dwyer explained key trends in global bitcoin exchanges and outlined several recommendations for cryptocurrency regulations.
Fidelity Investments’ Hadley Stern remarked on the potentially transformative nature of bitcoin and blockchain by sharing use cases that have been tested at Fidelity Labs’ bitcoin incubator. He also called on regulators to seek flexible, consistent regulatory guidelines that protect investors without stunting the innovative potential of this technology.
Bert Ely of Ely & Company Inc. highlighted blockchain technology’s role in propagating cryptocurrency and what it means for policymakers. He also discussed the role that speculations play in driving the market value of cryptocurrency and the current flaws in cryptocurrency mechanisms, pointing out that there is no argument for central banks to issue cryptocurrencies.
AEI’s Paul H. Kupiec described the function that currencies have played historically, from ancient Croesus to colonial America. He pointed out that, although cryptocurrencies might represent a financial bubble, such bubbles are in fact frequent in financial history.
The rise and fall in the price of bitcoin and competing cryptocurrencies make headlines daily. Are bitcoin and its competitors viable currencies or just a fad that will fade if a speculative bubble bursts? Is the underlying blockchain technology that makes bitcoin possible an important financial innovation? Do cryptocurriencies create economic value, or are they valuable because they hide transactions from governments? Will (and should) governments kill cryptocurrencies or allow them to develop into important major payments systems?
Join AEI as a panel of experts discusses these and related issues.
Join the conversation on social media by following @AEI and @AEIecon on Twitter and Facebook.
Paul H. Kupiec, AEI
Jerry Dwyer, Clemson University
Bert Ely, Ely & Company Inc.
Paul H. Kupiec, AEI
Hadley Stern, Fidelity Investments
Alex J. Pollock, R Street Institute
Wine and cheese reception
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Jerry Dwyer is a professor and BB&T Scholar at Clemson University. He is also an adjunct scholar at the Cato Institute and a research associate at the Centre for Applied Macroeconomic Analysis at Australian National University. He was director of the Center for Financial Innovation and Stability and vice president at the Federal Reserve Bank of Atlanta from 1997 to 2012 and a professor of economics at Clemson University from 1989 to 1999. Dr. Dwyer’s research has appeared in leading economics and finance journals, publications by the Federal Reserve Banks of Atlanta and St. Louis, and books. He serves on the editorial boards of the Journal of Financial Stability, Economic Inquiry, and Finance Research Letters. He is a past president and member of the Executive Committee of the Association of Private Enterprise Education. He also was a founding member of the Society for Nonlinear Dynamics and Econometrics, an organization for which he served as both president and treasurer, and which honored him by creating the Gerald P. Dwyer Prize in Financial Econometrics. He holds a Ph.D. in economics from the University of Chicago.
Bert Ely has consulted on deposit insurance and banking issues since 1981. In 1986, he became an early predictor of the savings and loan crisis and a taxpayer bailout of the Federal Savings and Loan Insurance Corporation. In 1991, he was the first person to correctly predict the noncrisis in commercial banking. As an independent consultant based in Alexandria, Virginia, he continuously monitors conditions in the banking industry and monetary policy. In recent years, he has focused on the challenges arising from the implementation of the Dodd-Frank Act, housing finance issues, the Farm Credit System, and other issues affecting the financial sector. Most recently, he has been commenting on cryptocurrencies and blockchain technology. Mr. Ely has testified on numerous occasions before congressional committees on banking issues, and he often speaks on these matters to bankers and others. He received his M.B.A. from the Harvard Business School in 1968 and his bachelor’s degree in economics in 1964 from Case Western Reserve University.
Paul H. Kupiec is a resident scholar at AEI, where he studies the management and regulation of banks and financial institutions markets, including issues of systemic risk and the impact of financial regulations on the US economy. Before joining AEI, Dr. Kupiec was director of the Center for Financial Research at the Federal Deposit Insurance Corporation (FDIC) and served as chairman of the Research Task Force of the Basel Committee on Banking Supervision. Before joining the FDIC, he held positions at the International Monetary Fund, Freddie Mac, J. P. Morgan, and the Board of Governors of the Federal Reserve System. Dr. Kupiec has served on the editorial boards of the Journal of Financial Services Research, Journal of Risk, and Journal of Investment Management. He was a member of the Shadow Financial Regulatory Committee.
Alex J. Pollock is a distinguished senior fellow at the R Street Institute. He was previously a resident fellow at AEI. Before joining AEI, he was president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. Mr. Pollock focuses on financial policy issues, including financial cycles, government-sponsored enterprises, housing finance, banking, central banking, uncertainty and risk, retirement finance, corporate governance, and political responses to financial crises. He is the author of “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2010), as well as numerous articles and congressional testimonies. Mr. Pollock is a director of CME Group, Great Lakes Higher Education Corporation, and the Great Books Foundation, where he was chairman of the board from 2006 to 2014, and he is a former president of the International Union for Housing Finance.
Hadley Stern is senior vice president, managing director for the Enterprise Services group, a business division of Fidelity Investments, which is the largest mutual fund company in the United States, the number-one provider of workplace retirement savings plans, and a leading online brokerage firm. Since 2015 he has been running the bitcoin/blockchain incubator within Fidelity Labs, focused on this technology’s disruptive potential. From 2007 to 2015, he was responsible for the oversight of all product strategy, product development, and program management for FidelityLabs.com and Fidelity.com/beta. Products launched under his leadership include Fidelity’s first iPhone app and Fidelity on Facebook and Twitter. Previously, Mr. Stern acted as group creative director for PI Fidelity Advertising Agency from 2004 to 2007. In his role, he managed a team of designers and writers responsible for developing and implementing various interactive creative products for the firm’s advertising needs. From 2001 to 2004, he was the interactive art director for PI Fidelity Advertising Agency, where he was responsible for the development, design, and drive of Fidelity’s visual advertising mediums. Before joining Fidelity in 2001, he was a director of experience at Razorfish beginning in 1999, after joining the company as a senior designer in 1998. He was a graphic designer at Rykodisc from 1998 to 1999 and began his career with Malcolm Grear Designers in 1997. Mr. Stern is the author of “iPod and iTunes Hacks: Tips and Tools for Ripping, Mixing, and Burning” (O’Reilly Media Group, 2004). He is also the patent holder of 10 patents for Fidelity Management & Research Co. He received his bachelor of arts degree in liberal arts and creative writing from Concordia University in 1994 and his bachelor of fine arts in graphic design from the Rhode Island School of Design in 1997.