Topic: Bitcoin dealers seek official regulation for digital tokens (Read 396 times)
Sounds great! Now where can I obtain this digital token play money?
Digital transaction system can be used for new businesses and to promote growth, officials told at Downing Street meeting
Bitcoin's potential and financial innovation were discussed during a Downing Street meeting. Photograph: Luismmolina/Getty Images
Bitcoin dealers have told the British government that it should introduce regulation for the digital tokens so they can be used for new businesses and to promote growth.
At a Downing Street meeting on Wednesday, smaller banks, finance houses and Bitcoin companies told officials that big banks are blocking the creation of business accounts for money remittance because of fears over financial crime.
The meeting, attended by about 40 people, included high-level civil servants from the Department for Business, Innovation and Skills and other government departments interested in Bitcoin's potential, and more generally in how to encourage financial innovation in Britain.
While US and German regulators have introduced some regulatory guidance around Bitcoin in recent months – with one US judge ruling that it is a currency, and the German finance ministry ruling it could be used for private transactions – there is no such recognition in the UK.
Bitcoin is an entirely digital transaction system with no central issuing authority, but where each "coin" is produced by computers solving extremely complex cryptographic problems. They can be transferred anonymously, making it unclear who is providing or receiving payments.
The supply of coins is limited by nature; about half have been "mined" since Bitcoin appeared in 2009, but that process will continue at an ever slower rate until 2140. The lack of a central issuer has led to wide swings in its value against currencies such as the pound and dollar – although in general it has appreciated against them.
Tom Robinson, a 32-year-old entrepreneur who was present at the 90-minute meeting, and aims to launch a virtual currency exchange called BitPrice, said that the principal complaint was that banks are blocking the creation of new accounts for money remittances.
"I think it comes from the fines that HSBC got in the US over money-laundering recently," he told the Guardian. In December 2012, HSBC chose to accept a $1.9bn (£1.2bn) fine from US regulators rather than face prosecutors. US investigations found that a "blatant failure" in implementing anti-money-laundering controls had allowed Mexican drug cartels and terrorists to funnel money through the bank.
Robinson, who set up BitPrice to enable exchanges between Bitcoin and currencies such as sterling, said he would welcome regulation even if it made transactions more cumbersome.
The lack of regulation at present means there is no compensation for anyone who carries out a Bitcoin transaction and loses all their money through fraud or failure on the part of the enabler. That has not proved to be a barrier to transactions, but Robinson thinks that regulation would nonetheless have a positive effect.
Concerns that Bitcoin transactions are in effect anonymous – because no name need be attached to the "wallet" receiving or sending the coins – could easily be overcome, said Robinson. "Anonymity might be something that has to go if it's to become mainstream," he said. "But in reality you can see where every Bitcoin goes through the system."
That is because each is unique, and has to be verified by solving the cryptographic problem to be transferred. "If you cash it in to pounds or dollars, you can see who has made that transaction by normal methods."
Robinson said he was optimistic at the end of the meeting about the prospects, but there is no clear timeline for implementation.
http://www.theguardian.com/technology/2013/sep/05/bitcoin-dealers-regulation-downing-street
Bitcoin's potential and financial innovation were discussed during a Downing Street meeting. Photograph: Luismmolina/Getty Images
Bitcoin dealers have told the British government that it should introduce regulation for the digital tokens so they can be used for new businesses and to promote growth.
At a Downing Street meeting on Wednesday, smaller banks, finance houses and Bitcoin companies told officials that big banks are blocking the creation of business accounts for money remittance because of fears over financial crime.
The meeting, attended by about 40 people, included high-level civil servants from the Department for Business, Innovation and Skills and other government departments interested in Bitcoin's potential, and more generally in how to encourage financial innovation in Britain.
While US and German regulators have introduced some regulatory guidance around Bitcoin in recent months – with one US judge ruling that it is a currency, and the German finance ministry ruling it could be used for private transactions – there is no such recognition in the UK.
Bitcoin is an entirely digital transaction system with no central issuing authority, but where each "coin" is produced by computers solving extremely complex cryptographic problems. They can be transferred anonymously, making it unclear who is providing or receiving payments.
The supply of coins is limited by nature; about half have been "mined" since Bitcoin appeared in 2009, but that process will continue at an ever slower rate until 2140. The lack of a central issuer has led to wide swings in its value against currencies such as the pound and dollar – although in general it has appreciated against them.
Tom Robinson, a 32-year-old entrepreneur who was present at the 90-minute meeting, and aims to launch a virtual currency exchange called BitPrice, said that the principal complaint was that banks are blocking the creation of new accounts for money remittances.
"I think it comes from the fines that HSBC got in the US over money-laundering recently," he told the Guardian. In December 2012, HSBC chose to accept a $1.9bn (£1.2bn) fine from US regulators rather than face prosecutors. US investigations found that a "blatant failure" in implementing anti-money-laundering controls had allowed Mexican drug cartels and terrorists to funnel money through the bank.
Robinson, who set up BitPrice to enable exchanges between Bitcoin and currencies such as sterling, said he would welcome regulation even if it made transactions more cumbersome.
The lack of regulation at present means there is no compensation for anyone who carries out a Bitcoin transaction and loses all their money through fraud or failure on the part of the enabler. That has not proved to be a barrier to transactions, but Robinson thinks that regulation would nonetheless have a positive effect.
Concerns that Bitcoin transactions are in effect anonymous – because no name need be attached to the "wallet" receiving or sending the coins – could easily be overcome, said Robinson. "Anonymity might be something that has to go if it's to become mainstream," he said. "But in reality you can see where every Bitcoin goes through the system."
That is because each is unique, and has to be verified by solving the cryptographic problem to be transferred. "If you cash it in to pounds or dollars, you can see who has made that transaction by normal methods."
Robinson said he was optimistic at the end of the meeting about the prospects, but there is no clear timeline for implementation.
http://www.theguardian.com/technology/2013/sep/05/bitcoin-dealers-regulation-downing-street
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