Brother, Can You Spare a Bitcoin?
NEW YORK ( MainStreet) Should Bitcoin be regulated? It depends on who is doing the talking. Some say the government cannot wait to get its hands on bitcoin. Others say government prefers to stay away, for now, from regulating it.
Tony Gallippi, CEO of BitPay, a bitcoin currency electronic payment processing system, says no. He broached the subject speaking at a Yahoo! Finance panel in March. He said there were plenty of financial regulations already on the books that can apply to Bitcoin. Nothing new is needed.
But he also maintains that regulators are not anxious to regulate the cryptocurrency. If they would, investors would be more secure about Bitcoin. Regulators want to maintain a degree of apprehension around investing in Bitcoin, because making it comfortable for investors would upset the status quo and make Bitcoin more attractive.
But Iain Murray, vice president of strategy and head of the Center for Economic Freedom at the Competitive Enterprise Institute (CEI), a Washington, D.C. free market think tank, has a different perspective.
"The regulators are tasting blood around bitcoin, and like sharks they are positioning for the kill," Murray wrote on the CEI blog. "The blood that they taste was not actually shed by bitcoin itself but by a bitcoin exchange, Mt.Gox, which filed for bankruptcy in a U.S. court on March 10. The troubles faced by the exchange have led to calls by legislators like Senator Joe Manchin (D.-WV) for regulators to act. It is a rare regulator that does not seek to expand his powers, so they are lining up for a piece of the regulatory action."
Murray said that the Financial Industry Regulatory Authority (FINRA) got the ball rolling by issuing a warning on March 11 to investors about possible fraudulent activities involving Bitcoin related companies. This was followed by the Commodities Futures Trading Corp. (CFTC), which is determining whether Bitcoin was eligible to be regulated as a commodity or as a derivative. Then the Texas Securities Commission stopped a company from selling securities using Bitcoin.
Meanwhile the FRB chair Janet Yellen already declared on March 3 that Bitcoin is out of her realm, because it operates outside of the banking system. She did say that Congress could do something. But it will not be easy.
"I think it's not so easy to regulate Bitcoin because there's no central issuer or network operator to regulate," said Yellen.
Last November, a Senate banking committee held a hearing about Bitcoin. One of the panelists testifying was Paul Smocer, president of BITS, the technology policy division of the Financial Services Roundtable, which represents 100 of the largest integrated financial services companies providing banking, insurance and investment products and services to the American consumer.