Who's Afraid of Cryptocurrencies? Everyone in Washington

Finally, we seem to have a bipartisan consensus in Washington. Both parties are terrified of new private money and they want to regulate it out of existence. The near universal fear and loathing by government officials of these so-called cryptocurrencies is all the more reason they should exist.A cryptocurrency is a privately sponsored and operated form of money that is not supplied by government. Bitcoin has already been traded for years, but the new leading horse is the multibillion-dollar Libra that Facebook is creatingThe Wall Street Journal's recent headline expressed worries of government officials: "Facebook Faces Broad Resistance to Crypto Plans."Last week's congressional hearing on crypto-currencies revealed broad agreement that U.S. regulators and policymakers must force cryptocurrency companies to comply with a catalog of regulations governing financial risks, money laundering and terrorism.Meanwhile the European Union officials say that private money could risk igniting "financial instability" in global markets. The White House has also voiced skepticism.Rep. Maxine Waters, chairwoman of the powerful House financial services committee, has called on Facebook to, according to The Hill, "agree to a moratorium on any movement forward on a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action."Thank God the internet didn't face this kind of universal resistance or we would all still be using dial-up modems.What is everyone so afraid of? The one word answer is: competition. Cryptocurrencies challenge the state's strangle-hold monopoly over fiat money. This could diminish the authoritative powers of arrogant and fallible central banks.Before refuting some of these concerns, for full disclosure I should note that I recently became an investor and economic consultant with Decentral, a California-based crypto that will tie its currency to the dollar.Cryptos will provide a "private option" alternative to government money. They are hedges against inflation. and they can execute global blockchain transactions much more swiftly and at lower costs than using government money.The claim that these currencies will be used by drug runners, money launderers and tax cheats is certainly legitimate. But this is like saying that automobiles should have been outlawed because they were used as getaway vehicles for criminals like Bonnie and Clyde. Almost any new technology can be used for good or evil. There are many legitimate reasons that hundreds of millions of law-abiding citizens worldwide would want financial privacy from government. They shouldn't be suspected of criminal activity simply because they want that right.What is laughable is the claim that cryptos risk causing financial panics. Wait a minute. The Fed and other central banks and government financial regulators have done a pretty good job of whirling up crises on their own. Nearly every recession and depression of the last century can be traced to government mistakes, and often by the self-proclaimed oracles at the Fed.Governments in the U.S. and around the world have amassed tens and even hundreds of trillions of dollars of debts and unfunded liabilities. It's hardly paranoid to think politicians will eventually try to inflate their way out of these debts.Cryptos are a check and balance against currency debauchery.This revolution in what we call money is coming one way or the other and the unprepared regulatory regimes will mostly delay and complicate, or may send the activity underground. The more these products are resisted, the more it is likely to drive up demand for private money alternatives. Just look at the big gains in Bitcoin in recent months.Congress and the regulators should let this new exciting digital technology proliferate. No one knows whether Libra, Decentral, Bitcoin or other private competitors will win out. But as Ralph Benko, formerly with the Chamber of Digital Commerce, has pointed out: "What would have happened to American technological dominance if regulators had snuffed out Google, Amazon, Facebook, Netflix?"These companies would have been stillborn and Google might have emerged in Switzerland, Facebook in Singapore, Amazon in Israel. This would only weaken America's technological superiority and hurt the dollar, not save it. Besides, who is a greater threat to our liberties and American economic prosperity? Mark Zuckerberg or Rep. Maxine Waters?Stephen Moore is a senior fellow at the Heritage Foundation and an economic consultant with FreedomWorks. His latest book, co-authored with Arthur Laffer is: "Trumponomics: Inside the America First Plan to Revive Our Economy." He wrote this column for The Dallas Morning News.  Continue reading...