He said because of the large financial sums invested in the digital currencies, the industry is not likely to be able to operate without government insight.
“When you have large financial sums in secret, you have risks of money laundering, risks of supporting criminal activity, risk of innocent people being ripped off,” he said.
Summers, speaking on Bloomberg TV, said the situation was comparable to the airline and automobile sectors, where more regulation ended up allowing the industries to continue.
Summers’ comments came after China banned crypto transactions, vowing to stop mining as well, in what has been called a crucial blow to the form.
That country has long expressed a skepticism about crypto because of its ties to fraud and money laundering, along with the environmental impacts.
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Summers said the crypto industry needs to stop clinging to the notion that it will be a “paradise” without any government intervention. He said that the sector needs to embrace regulation because it is systemic in its importance. He said this was a good idea “not just for the protection of consumers but protection of themselves,” he said.
PYMNTS reports that two of the largest bitcoin exchanges, Huobi and Binance, won’t be accepting new registrations from Chinese users because of the government crackdown there.
See also: Bitcoin Exchanges Bar Chinese Users Following Ban
While users in Hong Kong will still be free to sign up, mainland Chinese users won’t be able to, and existing Huobi accounts from there will be closed by the end of the year so as to comply with the new regulations.
Meanwhile, Binance is under investigation by the U.S., with part of the charge being allegations of market manipulations and insider trading. PYMNTS writes that the lawsuit is investigating whether Binance has been taking advantage of customers.
Learn more: US Investigation of Binance Widens to Include Alleged Market Manipulation
