Authorities should create regulations for a bitcoin exchange platform that utilises multi-signature wallets, cryptographic proof of liquidity and reserves, and complete transparency as a business model, bitcoin marketers Neo & Bee – LMB Subsidiaries Limited said on Wednesday.
The written statement came in response to warnings about the use of digital currencies issued by Cyprus authorities on Tuesday.
Neo & Bee in an announcement on Wednesday replied, “As we have been requesting for months, authorities should create regulations for a bitcoin exchange platform that utilises multi-signature wallets, cryptographic proof of liquidity and reserves, and complete transparency as a business model. As we said to CySEC and the Central Bank, the businesses that operate with bitcoin should be regulated under a sober and equally innovative framework, perhaps even under a new regulatory body.”
On the second risk mentioned by the ministries of money being stolen from a digital wallet, the company said, “money can be stolen from any wallet, physical or digital, including bank accounts, credit cards, vaults, safes, mattresses and by trusting the wrong person.”
On the third risk mentioned that the value of virtual currency can change quickly and even drop to zero, Neo & Bee added that “bitcoin is extremely unlikely to go to zero, whereas the euro is designed to decrease in value every year, as per the initial design of Keynes. Also, as long as bitcoin has utility, it will have value. As long as the banking system fails to provide honest services, bitcoin will have utility and thus value.”
The company also said that cash is by far the safest and most anonymous way to complete monetary transactions for nefarious reasons, as repeatedly proven by convicted criminals around the world, who do not go to jail because they are “systemic” and therefore too-big-to-jail.
“Systemic risks do not exist in bitcoin, and that’s why failed businesses should and must die so that the healthy ones can move on, and not take the wealth of the country and its future with it.”
They said “the regulators of bitcoin are everyone using it, the rules and transactions are transparent and securing your bitcoins is not much harder than protecting your email password. Also, you can back them up and further protect them against theft and loss, unlike euros or gold.”
The company said it would continue striving to be regulated and prove to the authorities that it can be more transparent than any previous financial institution. “Countries as the USA, Germany, UK and Luxemburg are trying to find ways to make it easier for bitcoin businesses to operate, and take advantage of the transparency potential it offers against money laundering and tax evasion,” they added.
Neo & Bee opened up in Nicosia, not so long ago, and ever since, the company has partnered up with several companies, including So Easy Stores, LTV and Telemarketing. Since then, the company have been seeking some stamp of approval from regulators. They’ve met with CySEC and talked bitcoin, although it’s understood that the company’s overtures to the Central Bank have so far gone unheeded.
The Central Bank seems not to know what exactly to do with bitcoin, which is classed neither as a currency in the conventional sense, nor as a financial instrument – and hence is beyond the realm of regulation. And when it comes to virtual currencies, “it’s a completely grey area,” an official at the Cyprus Central Bank said.
Neo & Bee want to convince CySEC to green-light trading in bitcoin-based financial derivatives – a first globally, but in order for derivatives to be based on bitcoin, bitcoin first needs to be classed as a financial instrument or at least a commodity. But even before that, a financial instrument must be deemed as a currency, and central banks alone have that discretion.
It’s unlikely, however, that the Central Bank of Cyprus would endorse bitcoin before the European Central Bank gives the digital currency the nod or, at the least, issues some guidelines.
Last modified: March 20, 2014 20:19 UTC