President Barack Obama and his administration get a lot of demands, to say the least.
Stop ISIS, bring peace to the Middle East, clean up the economy, create more jobs, fix the education system, lower taxes, etc., etc. Of course, that’s just what comes with the territory.
One thing that’s probably not higher on that rapidly growing list? Promoting bitcoin.
Which is why Obama and his team probably aren’t enthusiastic about an op-ed for CNBC from a former Commodity Futures Trading Commission (CFTC) commissioner suggesting that the White House should “heed the call” on bitcoin. Of course, when the former commissioner, Bart Chilton, says bitcoin, he’s talking blockchain and all digital currencies. But the term “bitcoin” is always what made this story light up the mainstream news headlines.
So, why digital currencies? Because he believes there should be proper protection and regulation over them. Fair point. His comparison? How Bill Clinton’s administration dealt with the Internet in order to ensure it was not over-regulated. Wait — blockchain is like the Internet? Oh, please. Here’s exactly why blockchain isn’t like the Internet at all.
Chilton says, “When the Internet was being developed, an effort and initiative by the Clinton administration to ensure that the fledgling idea would not be overly regulated was put in place — the 1997 Framework for Global Electronic Commerce. The point: to ensure laws and regulation would not negatively impact innovation. Current CFTC Commissioner Chris Giancarlo recently (and rightly) called for such protection for digital currency. President Obama should heed the call,” he wrote.
As Karen Webster pointed out in her piece, chiding everyone from thinking that bitcoin and the blockchain are “just like the Internet,” the Internet (back in the 90s and still today) is not governless. But, outside of a few states that are attempting to rein in how digital currency products are handled, there’s no set standard nationally on how or if bitcoin’s blockchain should have a set of regulations.
But it’s exactly that lack of regulation that is keeping bitcoin from taking off — and the blockchain as well, for that matter, since bitcoin is its primary method of transport. The fact that bitcoin’s biggest use case is all about the Dark Web doesn’t really support the notion that it should be loosely regulated — and that there is a huge difference between privacy and security and anonymity when it comes to financial transactions.
“There is a huge opportunity that can be tapped into if U.S. government officials and industry thought-leaders establish an appropriate balance between basic consumer protection regulation and an openness which not only permits, but fosters and promotes, innovation. We did it with the Internet, and we need to do it now with virtual currencies like bitcoin,” he concluded.
Yep. Just like the Internet.
But that wasn’t all that happened in bitcoin land this week…
A Tale Of Two Bitcoin Exchanges: Winklevoss’ Bitcoin Woes
Last week, the Winklevoss twins had cause to celebrate: Their bitcoin exchange, Gemini Trust Company, got official approval from the New York State Department of Financial Services to trade digital currency.
This week, however, the twins are having issues on another one of their bitcoin adventures — Because they obviously have more than just one bitcoin-focused initiative. This time around, it’s about Winklevoss Bitcoin ETF, which has left the Winklevoss Bitcoin Trust (its actual name) in limbo with the SEC. That fund was filed with the SEC for regulatory approval in July 2013.
Nearly three years later, the fund that was designed to make investing in bitcoin similar to buying a stock hasn’t quite come to fruition. What this would do, in theory, is make bitcoin more accessible to investors. But will it ever actually happen?
It’s not looking good.
Welcome To ‘Crypto Valley’
While the U.S. has Silicon Valley, there’s a little town in Switzerland that is known as “crypto valley.” As expected by its name, it has a high volume of bitcoin and blockchain startups in a small area.
Maybe someday, it will get an HBO comedy hit about it, too.
But what this little town, Zug (that is its real name), is testing out is how it can use bitcoin payments for government services. This involves a trial run of bitcoin payments to determine if the town’s residents care to pay that way. It will, however, place a cap on bitcoin payments at 200 francs (around $206) and can be used for public utility payments.
This test run of bitcoin payments will continue throughout the remainder of the year. Officials reported the test is being conducted to determine if bitcoin could be an actual payment option to streamline the payments process.
Mayor Dolfi Müller said, according to local news reports: “We want to express our openness to new technologies … Our goal is to meet [FinTech entrepreneurs’] needs for optimal development in our thriving environment.”
Japan’s Bitcoin Industry Still In Limbo
To regulate bitcoin or not to regulate bitcoin. That is the question many governments have at the moment. And one of the governments leading the pack is Japan.
And for good reason after the Mt. Gox bankruptcy debacle that still, to this day, has yet to be solved. For now, however, the bitcoin industry in Japan is a bit in limbo. While it appears that attitudes in Japan are shifting toward regulating bitcoin in order to avoid a Mt. Gox 2.0 from happening, there’s been quite a delay in how to get there.
It’s certainly not the only country to have the same issues. At the moment, what’s on the government’s plate is to how to regulate virtual currencies and where that could fit into its Banking Act and Payment Service Act.
Here’s what’s be considered for virtual currency regulation:
- Bringing registered cryptocurrency exchanges under Japan’s anti-money laundering laws
- Mandating exchange operators meet certain pre-set financial conditions, such as having a minimum amount of capital
- Mandatory external checks from certified public accountants or auditing firms that exchange operators will have to undergo
- Transaction records will have to be maintained and stored by operators
- Operators will also be responsible for security measures and the computer systems required to protect their users’ information
Currently, at least from local media reports on the subject, it appears bitcoin operators are open to regulation so that some certainty about how to manage the industry can finally be cleared up for the exchanges and the consumers who want to work with them.
Those Mt. Gox users would also likely push for a little regulation over the industry, too.
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