Bitcoin Regulation Under Discussion
New York City's financial regulator has called for firms to enter propositions in order to create exchanges for digital cryptocurrencies such as Bitcoin.
According to the New York Department of Financial Services, regulation of these currencies would help protect customers and reduce instances of money laundering.
The statements came a week after Mt. Gox's announcements regarding bankruptcy after $500 million or more was stolen by hackers. Mt. Gox has since filed for bankruptcy, receiving a lot of criticism from their many users who had lost money using the exchange.
The Mt. Gox situation triggered a loss of confidence in Bitcoin during February, causing the value to plummet from over $800, to as low as $400. It has since rebounded to approximately $635.
Still, Bitcoin is not currently being governed by any financial regulations.
Many are skeptical that Bitcoin and other cryptocurrencies will ever go away. According to Benjamin Lawsky, New York's superintendent of financial services, cryptocurrencies will likely never cease to exist now that they have become semi-mainstream.
Without any regulations or oversight, Bitcoins are becoming increasingly used for illegal activities. Bitcoins can be difficult or impossible to trace, and as a result, is seen by many as an option for tax evasion and/or money laundering. It is also impossible to reverse Bitcoin transactions, so any coins stolen cannot be recovered through "chargebacks" that other conventional services like PayPal use.
It is illegal to use Bitcoins in Russia, and China has restricted banks from handling any Bitcoin transactions. In Singapore, Bitcoin transactions are being taxed. Many are discussing similar restrictions to be imposed in the United States.
Following Mt. Gox's massive losses, many are calling for some oversight regarding Bitcoins to prevent something like that from happening again. Others claim the transparency of Bitcoin transactions are one of its benefits, especially in an age where government surveillance is becoming increasingly widespread. The absence of chargebacks has also proven to be a plus to many, as fraudulent chargebacks with PayPal happen all the time.
Regardless of anyone's stance, it may not even be plausible to implement a way to regulate Bitcoin, since its transparency is by design. Many businesses are now accepting Bitcoin as a payment method. A business law attorney can help guide you through the legal process of implementing Bitcoin into your business, since there are clearly legal hurdles right now.
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