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Bitcoin is a virtual currency that has caused a lot of controversy in recent months. The “Wild West” days of Bitcoin may be coming to an end. Watchdog groups and state officials alike are planning ways to regulate Bitcoin exchanges. Here’s what you should know about these planned Bitcoin reforms.
1. New York Regulator Plans ‘Regulated’ Bitcoin Exchanges
The video above introduces Barry Silbert, who plans to start a U.S. Bitcoin exchange.
The BBC reports that a different New York figure also plans to create ‘regulated’ Bitcoin exchanges.
Benjamin Lawsky, New York’s superintendent of financial services, along with New York’s Department of Financial Services, are seeking proposals for Bitcoin regulatory oversight.
This news comes in the wake of Japanese officials saying that Bitcoin should be taxed, which it already is in Singapore.
2. Feds Also Considering Bitcoin Regulations
Digital Journal reports that the feds are considering Bitcoin regulations as well.
Mark Wetjen, acting chairman of the Commodity Futures Trading Commission, told journalists that there have been “internal discussions” about regulatory options.
The Commodity Futures Trading Commission is a federal agency charged with protecting market participants and the general public from fraud.
3. Bitcoin Regulation Is ‘Inevitable’
According to the New York Times, more Bitcoin regulation is “inevitable.”
The Times quoted Barry E. Silbert, the founder of Bitcoin Investment Trust, who agreed that “it may be appropriate to regulate any transaction that involves an unregulated intermediary converting Bitcoin to dollars on behalf of a third party.”
Given that Bitcoin has developed a somewhat unsavory reputation after being used in drug deals, regulation does seem to be a priority for state and federal lawmakers.
4. Many US Lawmakers Are Threatened by Chinese Use of Bitcoin
Mt. Gox falls, but China is seeing a bitcoin 'gold rush' – The Tell – MarketWatch http://t.co/bgQtbYy4VS #bitcoin #btc
— Bitcoin Solutions (@BTC_Solutions_) March 11, 2014
While it might seem xenophobic to some, there are certain lawmakers in the US who are clamoring for Bitcoin regulation simply because so much Bitcoin is in Chinese hands.
In the New Yorker, the following quote appeared:
“‘We do not think that it is in anyone’s best interest for digital currency to become an offshore industry or an industry dominated by China,’ said Jeremy Allaire, the founder of a startup called Circle Internet Financial, in written testimony provided as part of his appearance, on Monday, at a hearing by the U.S. Senate Committee on Homeland Security and Governmental Affairs on the risks and benefits of digital currencies such as Bitcoin.”
That being said, another quote from the same article indicates that Bitcoin’s use in China should not be seen as a threat.
“‘The main reason Bitcoin has become big in China is because Chinese people are savers, and more people are seeing Bitcoin as a way to store and invest their money,’ Linke Yang, the vice-president of BTC China.”
5. ‘BitLicenses’ Are One Way Bitcoin Will Be Regulated
New York finance regulator is taking applications for BitLicense, the first government oversight of #bitcoin: http://t.co/AsvgSFnVcx
— WSJ Markets (@WSJmarkets) March 11, 2014
CNNMoney reports that Benjamin Lawsky, New York’s financial services superintendent, plans to issue “BitLicenses” to companies dealing in Bitcoins.
Lawsky believes that regulations will actually benefit Bitcoin, not limit it.
“‘If we get those rules right, perhaps we can make New York and the United States a magnet for legitimate, well-regarded exchanges and other virtual currency firms,’ he said.”