Legislation in the Bitcoin world will always be a topic of substantial debate. US Congress seems to support the plans of creating an open-minded regulatory system for the cryptocurrency. In fact, a resolution was approved to encourage the development of tools for consumers to learn and protect their assets through technology. An interesting step in the right direction, but what about the long-term future?
Ultimately, a lot of Bitcoin companies would prefer to be exempt from state money transmission laws. Particularly exchanges, peer-to-peer platforms, and Bitcoin wallet services would require such a license since they hold customer funds directly. But for now, the current “ruling” also includes Bitcoin miners and multisignature wallet providers.
Not Everything Going On in Bitcoin Is A Solvency Risk
While all of these platforms technically store funds on behalf of the user, it is not the case in reality. Multisignature platforms, for example, only hold one of at last three private keys, and they are not in control of the funds at any given time.
This creates an interesting scenario for legislators who are eyeing the Bitcoin space. Since there is no financial risk involved for Bitcoin miners and multisig providers, they should be exempt from money transmitter licensing requirements. But that would also mean they require entirely different regulatory guidelines, which will raise even more questions regarding cryptocurrency.
Policymakers will have their work cut out for them in this regard. It is important to distinguish between having full control over other’s money and acting as an intermediary with limited control. The latter category does not pose a solvency risk to its customers, whereas exchanges and traditional wallet providers do. After all, if they were to vanish, customer funds would be gone as well.
For the time being, it remains anybody’s guess whether such legislation will ever be created. It is evident consumers need to be able to use every disruptive technology at their disposal. Some of those innovations cannot be governed by traditional regulation and guidelines. The bigger problem is how very few policymakers accurately grasp the concept of Bitcoin. Conveying the message in layman’s terms will be a huge challenge.
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