The Argument against Regulation The Argument for Regulation What is Bitcoin? Bitcoin is a form of digital currency that can be used all around the world. Unlike traditional currencies, Bitcoin is not centralized to an institution, but is instead handled entirely by the users. Bitcoin is referred to as a pseudo-anonymous currency, because there is no tie to a user’s name when a transaction is made. The only connection to the user that is left behind is their Bitcoin address. Bitcoin Regulation Why do people care? As stated before, Bitcoin allows the user to handle their own currency rather than a bank. This means that they don’t have to worry about fees that go along with that, at the cost of less security should they somehow lose their Bitcoins. Also, because it is decentralized, there are no taxes on Bitcoin transactions. One of the big draws, though, is that it allows for anonymous transaction all across the world. The Argument against Regulation Those who oppose the regulations argue that imposing strict regulations will defeat the purpose of Bitcoin and ultimately lead to it’s decline. By requiring licenses for businesses that want to utilize Bitcoin, it takes away the anonymity of transactions which Bitcoin provides. One of the big draws for the use of Bitcoin is that users can freely trade currency without having their name tied to it. Another reason why there’s opposition to regulation is taxes. One important part of Bitcoin is that it isn’t centralized to any one institution, such as a bank. That means that up until now, it wasn’t subject to the currency laws of any one nation, including taxation. If regulation is allowed to be imposed on Bitcoin and other digital currencies, that could lead to taxes on the transactions, which contradicts the draw of having free exchange of the currency. The Argument for Regulation Supporters of regulation for Bitcoin argue that having rules in place would create protections for the consumer. This would mean that the regulators could pursue unfair and deceptive trade practices revolving around the transfer of digital currencies. One such case that came up in 2013 centered around one company’s use of customer computers as a network for illegally mining Bitcoins for themselves. The New Jersey Attorney General was the one to bring down this operation and ultimately set a precedent for similar protections in the future. Supporters would also argue that regulation of anonymous digital currencies would also prevent crimes such as money laundering. FinCEN, the regulation authority which was made to combat money laundering, established that Bitcoin transactions are subject to the same rules as banks. This means that it would have to follow the rules outlined in the Bank Secrecy Act, which include that they keep records and file reports of transactions. This is where the BitLicense comes in. If businesses have to obtain licenses to legally accept Bitcoin transactions, then the regulators can better track who is making the exchanges to prevent money laundering. The BitLicense The BitLicense is an attempt by the New York State Department of Financial Services to design regulations for companies engaged in virtual currency business activities. It will require that businesses accepting Bitcoin be licensed to do so within that state. This will also allow them to create consumer protections as well as prevent money laundering. It will obviously also allow for more control over a previously unregulated form of currency.

Resources http://www.coindesk.com/information/what-is-bitcoin/ http://www.coindesk.com/new-york-reveals-bitlicense-framework-bitcoin-businesses/ http://techpolicylab.org/bitcoin-law-and-policy/ http://theconversation.com/around-the-world-regulators-are-realising-bitcoin-is-money-45934 http://www.forbes.com/sites/norbertmichel/2015/03/10/has-bitcoins-time-come-the-market-not- public-policy-should-decide/ http://insidebitcoins.com/news/bitcoin-public-policy-associations-respond-to-the-final-bitlicense- release/32967