Another prominent member of the financial establishment has predicted that bitcoin will crater, while still professing admiration for the technology behind it.
“My best guess is that in the long run, the technology will thrive, but that the price of bitcoin will collapse,” Kenneth Rogoff, a former chief economist of the International Monetary Fund, wrote in an op-ed published Monday in The Guardian.
Like JPMorgan Chase CEO Jamie Dimon, Rogoff based his bearish take on the assumption that the world’s governments would not allow a borderless, pseudonymous system of value transfer to grow significantly.
Calling it “folly” to assume that bitcoin would be allowed to replace money issued by central banks, he said:
“It is one thing for governments to allow small anonymous transactions with virtual currencies; indeed, this would be desirable. But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely difficult to collect taxes.”
Rogoff famously advocated for phasing out large-denomination bills as a way to combat tax evasion and aid central banks in implementing monetary policies in his book “The Curse of Cash,” published this year, and struck similar notes in his op-ed.
For example, he went on to suggest cryptocurrency is even more suited to illicit purposes than the proverbial briefcases full of banknotes.
“Cash at least has bulk, unlike virtual currency,” he wrote.
Rogoff also offered his disapproval for Japan’s recognition of bitcoin as a legal method of payment.
While the government in the East Asian country has told cryptocurrency exchanges to identify customers and monitor transactions for suspicious activity, he argued that “global tax evaders” would likely attempt to acquire bitcoin anonymously and then launder it in Japan.
Perhaps unsurprisingly given this take, he concluded by expressing his hope that other countries won’t follow Japan’s lead.
“Carrying paper currency in and out of a country is a major cost for tax evaders and criminals; by embracing virtual currencies, Japan risks becoming a Switzerland-like tax haven – with the bank secrecy laws baked into the technology,” he wrote.