US Bitcoin Task Force Preparing to Launch the first Bitcoin Rule-Book

Journalist:
May 19, 2014

Reuters, the World news leader in business and financial news, is reporting that a Bitcoin task force of United States regulators has been busy working to put together the first Bitcoin rule-book. The rules will, hopefully, protect the users of bitcoins from fraud while being careful not to dampen down, or smother, what is effectively, still a fledgling technology. Tech 2, an online technology blog also reports that an ever-growing number of companies are willing to accept bitcoins, but since Bitcoin transactions are not centrally regulated, the users of Bitcoin face a maze of rules throughout the fifty states. Hence the perceived need for the financial task force.

[divider]CCN[/divider]

[dropcap size=small]D[/dropcap]avid Cotney was appointed in February to head the new Emerging Payments Task Force, a group of nine members of the Conference of State Bank Supervisors (CSBS). He said the task force had given itself roughly a year to complete the task.

“We may be looking at some type of model definitions, or model laws or regulations, and very likely recommendations to either our federal colleagues or to Congress,” David Cotney, the Massachusetts Commissioner of Banks since November 2010, told Reuters on the sidelines of a public hearing into the issue on Friday.

Bitcoin has enjoyed a growing transaction volume although the collapse of many exchanges, including the ever prominent Mt Gox, has caused great disquiet within the growing investor community. People seek alternatives, they seek alternative technologies, they seek lower transaction fees but they hate risk. It would seem that regulators have no problem with Bitcoin companies entering and trading in their states but they are seeking to ensure that the companies operate within certain safety parameters.

The advantages of a task force looking at Bitcoin on a national level are obvious. The collapse of Mt Gox, as well as the non delivery of items bought using bitcoins, leaves genuine consumers and users in a weakened situation. The very basis of common law is precedent and how does precedent work within a community who’s technology only stretches back to 2009? Does the legislation established to protect investors and consumers adequately protect Bitcoin users that have not spent, or invested, fiat money? How would a judge, trained in the nineteen seventies, that may rely on a court clerk to use a computer, adjudicate on alternative currencies? What are his or her guidelines? What is the accepted standard operational procedures within a community that, by definition, behaves within an environment of mutual distrust? These may seem to be silly questions to the Bitcoin initiated but to people outside the community they are indeed important issues.

Benjamin Lawsky, the New York superintendent of financial services and another task force member, states that his department is working on a “BitLicense”. California is also said to be showing interest.

To date, federal regulators have been keeping their cards, and opinions, close to their respective chests.. The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) last year classified administrators or exchangers of bitcoin as money transmitters, which puts them under the remit of state regulators. The Commodity Futures Trading Commission is studying whether it has jurisdiction, given that some firms are considering offering bitcoin derivatives. The US Internal Revenue Service has designated bitcoin as property, not currency.

Featured image by Shutterstock.

Last modified (UTC): May 19, 2014 22:49

PJ Delaney @P.J. Delaney@delboyir

Masters in Public Administration, Bachelors in Mgt., I live in Ireland, I have a bit of a background in Economics and lots of opinions on everything else.