Regulating cryptos adequately and comprehensively Second, regulators should refrain from implying that regulation can transform crypto-assets into safe assets. Efforts to legitimise unsound crypto models in a bid to attract crypto activities should be avoided. [35]  Moreover, the principle of "same activity, same risk, same regulation" should be endorsed. Cryptos cannot become as safe as other assets and investors should be aware of the risks. Anti-money laundering/countering the financing of terrorism rules should be enforced, and crypto activities of traditional firms should be carefully monitored. While some jurisdictions attempt to apply existing regulatory frameworks to crypto-assets, the EU’s Markets in Crypto-Assets Regulation offers a customised regulatory structure that applies to all 27 EU Member States and draws on existing regulation where appropriate (e-money being one example). The EU has also updated existing regulation, for instance by extending the travel rule to crypto transactions. [36] Despite the EU taking the lead in establishing a comprehensive framework regulating crypto activities, further steps are necessary. All activities related to the crypto industry should be regulated, including decentralised finance activities like crypto-asset lending or non-custodial wallet services[37]. Moreover, the regulatory framework for unbacked crypto-assets may be deemed lighter than for stablecoins as it relies mainly on disclosure requirements for issuing white papers[38], and on the supervision of the service providers which will offer them for trading. The risks posed by unbacked crypto-assets, which are largely used for speculative purposes, should be fully recognised.

But when interest rates soared from 1980 onwards, the payments to service this debt began to cripple the economy. At the same time, the projects these investments went into failed to deliver the expected returns. It all ended in a severe debt crisis that set back Latin America by at least a decade. Essentially, a mispricing of capital resulted in cheap funding and overinvestment. 11. Developed economies are equally prone to the risks of mispriced capital. The subprime mortgage crisis, which precipitated the global financial crisis less than three years ago, is another example of mispriced capital leading to excessive risk taking and leverage. Low interest rates in the US fuelled both a housing and a credit bubble that eventually burst, dragging down investors and intermediaries alike. 12. In emerging Asia, today, high levels of domestic savings coupled with large capital inflows pose the risk of unproductive investments and asset bubbles. When capital inflows slow down, as they inevitably must, the consequent unwinding will be rapid and possibly unpleasant. Asian policymakers have been responding to the situation in various ways 13. First, they have allowed the price of capital to rise – either through exchange rates or interest rates or both. Second, they have regulated the demand for capital through fiscal tools, such as transaction taxes and stamp duties. Third, they have regulated the supply of capital through administrative tools, ranging from restrictions on bank lending to selective capital controls. 14. The most effective way is to price capital correctly.