I was reading the news this afternoon and saw this article that caught my eye. It was notable due to it dealing with Bitcoin, and its use as an investment tool. Balanced Energy, a small oil company, run by Kirk Johnson was recently told by…
I was reading the news this afternoon and saw this article that caught my eye. It was notable due to it dealing with Bitcoin, and its use as an investment tool.
Balanced Energy, a small oil company, run by Kirk Johnson was recently told by Texas State Regulators they are not to accept Bitcoin payments. They served them with an Emergency Cease and Desist order.
Balanced Energy had announced in a pitch at the Texas Bitcoin Conference that they are the first company to accept Bitcoin for exploration investments.
Texas State Regulators wasted no time in telling Balanced Energy that they could not do that as they had not properly educated investors on the risks of Bitcoin.
A Texas State Regulator was quoted as saying
Risks inherent to the use of Bitcoin and the risk that fluctuation in the price of the digital currency may affect business operations.Texas Regulators Send Emergency Cease and Desist Order to Balanced Energy
A Balanced Energy spokesman said
The order aimed to address disclosure issues by the specific company, not pass judgment per se on the use of Bitcoin for oil investment.
Texas Regulators are also stating that this would not be a problem if Balanced Energy did their paperwork to make sure they are accredited investors.
When reading through the article it seems like Texas Regulators were jumping on this not due to paperwork concerns, but more the concern that they did not understand Bitcoin as a currency and wanted to stop it due to that lack of understanding.
This has left Kirk Johnson, president of Balanced Energy having to spend time and money on pursuing legal avenues to be able to proceed with Bitcoin.
In the Emergency Cease and Desist Order one thing that stuck out was this, part 14 line b of the order.
14. In connection with the offer for sale and sale of working interests in wells in the
South Runway Prospect and North Guitar Prospect, Respondents are
intentionally failing to disclose any material facts relating to the nature of the risks
associated with the investment, including, but not limited to, the following:
a. The nature of the risks associated with the purchase of working interests,
including risks inherent to investments in oil and gas drilling programs and
the risk that the investor may lose the entirety of their capital investment,
b. The nature of the risks associated with the use of Bitcoin to purchase
working interests, including the risks inherent to the use of Bitcoin and the
risk that fluctuation in the price of the digital currency may affect business
There are fluctuations in any currency. Bitcoin has been volatile lately yet has a huge upside and is still growing. Bitcoin offers a new option and should be embraced not pushed aside.
While both sides are figuring this out it can be a positive step forward for Bitcoin. There will hopefully soon be a clear path to using Bitcoin for investment purposes in Texas. This can give an example to other states to follow.
With New York looking to regulate exchanges so they can be opened, Overstock posting huge sales in Bitcoin and companies like Balanced Energy looking to expand and use Bitcoin as part of it’s business model things are looking great for wider adoption of Bitcoin.
There is always the risk Texas will ban it outright for this use, but I am hopeful that they will not, add in Kirk Johnson, and Balanced Energy look like they are in the fight to win there should be a positive resolution to this soon.
Last modified: January 10, 2020 2:38 PM UTC