This is the Cato Daily Podcast for Friday, October 1st, 2021.

I'm Caleb Brown.

China has effectively prohibited transactions in

cryptocurrencies seeking instead to try to compel citizens to stick with the transactions in two regs to squelch the financial innovation that crypto represents.

Caters George Selgin comments.

When I had heard news that China had effectively prohibited transactions in cryptocurrency. It was paired immediately with

Bitcoin was down 5% on the news and I thought well that's that's just another day in the life of

Bitcoin or crypto currencies so is there a broader effect or just how do you evaluate the effects of China saying no to

crypto essentially? Well if you mean the effect on the value of crypto you you've said it you look at the price and I do think that I do think that China's action is the reason for that particular slide in in Bitcoin's price because of course China is a big country and a lot of people

there contribute to the demand for Bitcoin so this is bound to have a chilling effect and it's also having a chilling effect because it it might bowed badly for the prospects of Bitcoin being treated nicely elsewhere, but one may hope that China's example

isn't widely followed.

As for the real serious, the most serious consequences of China's action are more symbolic

for most of us, but they're very serious for the Chinese people because it's part of a it's part of a broader

endeavor to concentrate all payments in the People's Bank of China and make it the one source of payments media and that in

turn will allow the Chinese state authorities to snoop more effectively if not quite systematically on all of their

citizens financial transacting so that's a big deal. To the extent that policy makers in the U.S. look at this decision and are looking for a path forward

with respect to crypto broadly.

Maybe it's just me, maybe it's my previously held beliefs looking into the prism of this

event, but it seems to me that this would strengthen the case for not regulating crypto, at least not harshly in the

United States.

Well, it all depends, Caleb, because I'm afraid we have lots of people here, including regulators,

for whom any stick is good enough to beat

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