Bitcoin exchanges, which were initially established to bypass unnecessary bank fees and regulation, are now seeking government approval. Bitcoin enthusiasts were originally driven by the fact that its value wasn’t tied to government policies or geopolitical factors.
Last week cryptocurrency prices surged following the promises of licensing and regulation (30% in the past two weeks). It came as a respite after last year’s performance where it fell from more than $1,000 at the end of 2013 to as low as $200 in January 2014. At this point it was being termed the worst investment of 2014.
Winklevoss brothers claim to be the first ones to seek regulation. They founded Gemini, a fully regulated, fully compliant bitcoin exchange earlier this month. But licenses don’t come easy. The twins have been waiting for a response from New York’s top regulator for about two years. They stated in their blog: They stated in their blog “Over the past two and a half years, we have spent a great deal of time educating ourselves and others about Bitcoin; investing in bitcoin; investing in Bitcoin-related companies; filing an S-1 registration statement with the Securities and Exchange Commission to create the Winklevoss Bitcoin Trust (an ETF focused on bringing bitcoin investment exposure to main street investors) which will list on NASDAQ; and launching a bitcoin price index called WinkDex that will price our ETF (online, iPhone, Android).”
In recent news, Bitcoin platform Coinbase announced the launch of the first regulated Bitcoin exchange in the US. They, however faced severe criticism from New York and California based regulators. In their defence, they cited age old money transmitter licenses in states including Alabama and Arkansas—which were created decades ago to allow companies like Western Union to send and receive money— as their only form of regulation. They also stated that Coinbase is “registered with FinCEN as a Money Services Business (MSB), which means the company itself is regulated at the federal level.”
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In light of these events, Matt Anderson, a spokesman for New York’s Department of Financial Services, told Quartz – “We are working with several companies, including Coinbase, on licensing and will continue to move forward expeditiously,” but clarifying- “That said we have not yet issued any licenses to virtual currency firms.”
Regulation will help bring Bitcoin into the mainstream so it’s “easy and accessible for the average person,” Coinbase’s head of government affairs John Collins tells Quartz. If Bitcoin becomes standardised it could become as mainstream as credit cards as a form of payment which is good news for virtual currency enthusiasts.
(image credit: BTC Keychain)