Government regulation or lack thereof, has been a constant impediment to the industry as a whole, and one regulatory member has had enough of this subversion.
Mark Wetjen, a Democratic member of the Commodity Futures Trading Commission, sounded off on the inability of government regulators, particularly in the U.S., to act on Bitcoin cohesively. He posted an op-ed piece in the Wall Street Journal extolling the many virtues of Bitcoin, and how it is being held back by inaction of regulators in the mainstream economic framework. This in turn has held back economic growth for many individuals who can benefit from all that Bitcoin has to offer. He says:
“Rarely can derivatives regulators anticipate a new market’s potential benefits while devising an appropriate regulatory framework. But virtual currencies such as bitcoin and other competing protocols and related technologies, represent such an opportunity.”
Underscoring the interest in Bitcoin worldwide, over five thousand people across the globe logged into the webcast of a recent CFTC public discussion of virtual currencies. This was “not a significant number by Internet cat-video standards, but by far the largest online audience that one of our meetings has ever attracted,” Wetjen said.
Bitcoin’s regulatory position is important to the CFTC because a number of merchants who are now accepting Bitcoin directly as payment for goods and services have expressed the need to hedge exposures to fluctuations in its value. The CFTC recently was presented with a Bitcoin swap contract that has been listed for trading by one registered trading platform. There are several other platforms already registered, or soon to be registered, that intend to list Bitcoin derivative contracts, a growing industry in a world now overwhelmed with new derivatives.
Bitcoin can fall under many financial asset definitions including as a “commodity” under the CFTC’s authorizing statute. Then the agency would have the authority to bring charges against individuals who attempt to manipulate the virtual currency. One of the many issues that plague Bitcoin is its innate ability to be many things to many people, and this seems to confuse regulators. The ability for Bitcoin to self-regulate would also be foolish to ignore. Wetjen said:
“The CFTC certainly has a responsibility to ensure to the greatest extent the integrity of the derivatives markets, including those for bitcoin swaps and other virtual currencies.”
Bitcoin is going through these growing pains as mainstream companies like Dish Network, PayPal and Dell Computers accept Bitcoin more directly as a payment method. Purists want Bitcoin left alone to grow, but not be hindered by government in regards to normally simple measures like opening a business account for Bitcoin services. Others who want more immediate growth push for mainstream markets like derivatives to engage in Bitcoin, with the help of common economic regulators.
What’s your view? More regulation or less? Are regulators helping or hurting Bitcoin by being inactive? Share above and comment below.
Images from CFTC and Shutterstock.