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Opinion
Tyler Cowen

Crypto Breaks the Rules. That’s the Point.

With cryptocurrencies, as with many other innovations, regulatory arbitrage is a feature, not a bug.

Breaking the rules

Breaking the rules

Photographer: Valeria Mongelli/Bloomberg

One of the most common criticisms of cryptocurrency is that it is just a way to get around financial rules and regulations. That criticism is not entirely wrong — but with crypto, as with many other innovations, regulatory arbitrage is a feature, not a bug.

Very often, regulatory arbitrage is most successful when the innovation improves on some aspects of the older methods. The arbitrage conveys the message that the old regulations need to change.