Sheila Bair, the former chair of the U.S. Federal Deposit Insurance Corporation (FDIC), is arguing bitcoin shouldn't be banned just because it doesn't have "intrinsic value."
In an op-ed article published on Yahoo Finance this week, Bair instead contends policies should be in place to protect investors. In the post, Bair elaborated that currency itself was once just like bitcoin — an idea assigned value by societies because people needed a medium to trade and that depended "more on psychology than physical attributes."
"Instead of making its own value judgments about bitcoin, what government should do is first make sure our policies don't feed the frenzy."
While Bair's view in supporting bitcoin is not entirely surprising given her roles as an independent advisor and director to several blockchain and cryptocurrency related projects, it is nonetheless notable given her previous capacity serving as the chair of FDIC, an agency created by the Congress to ensure financial confidence and stability.
She led the agency from 2006 to 2011.
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"Since the beginning of commerce, humans have assigned value to things of no readily-apparent intrinsic worth. Particularly in the case of mediums of exchange, a.k.a. currency, we assign value simply because those with whom we transact do so as well," Bair added.
Yet, while citing a few historical examples where the government had failed in maintaining the value of its fiat currencies, such as Germany in the 1920s and the Southeast Asian countries in the 1990s, Bair believes the role of the government should be focused on ensuring a fair and well-informed market, one free from fraud and manipulation and prohibiting bitcoin speculation from federally insured banking organizations.
Sheila Bair image via Shutterstock
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