All of us knew that Bitcoin has great potential and has done all right so far. After 5 years the US government is seeing it from our standpoint, at least more or less. During a meeting with the Federal Advisory Council (FAC), the board of governors of the federal reserve, this group stated that “Bitcoin does not present a threat to economic activity by disrupting traditional channels of commerce; rather, it could serve as a boon.”
Who is the FAC? The FAC is a group linked to the Federal Reserve on all financial matters under the US central bank’s jurisdiction, that does research and hands out advice to the Federal reserve.
During the debate, the FAC debated whether Bitcoin posed a threat to the traditional banking system, economic activity or financial stability. This meeting resulted in a surprisingly positive two-and-a-half-page assessment of the technology. It also stated that “Bitcoin could empower a new wave of commerce innovation – opening new markets to merchants, driving capital flows to the developing world and increasing global economic consumption”.
Is Bitcoin “the great evil or not?
Despite the fairly positive assessment the FAC made towards Bitcoin, they also voiced some of their concerns. FAC was very concerned about the recent development of the exchanges that operated without a control organ or some form of user security. OF course some exchanges are better than others but the FAC was still “very worried” about recent developments in legal actions, to put it in their words. The FAC is pointing to the Mt Gox debacle and the constantly changing and experimenting with other ways to earn more money, like imposing on share minimums and transfer minimums.
The FAC also stated that “the banking system has nothing to worry about Bitcoin” and that “Bitcoin will not intrude on the banks work”. The FAC went even further stating that “Bitcoin could one day be incorporated in their services” but this only after extensive research.
It seems that the US government is lessening it “harsh stance toward Bitcoin” a bit. This is also shown in last weeks approval of a company that has been allowed to go on the NASDAQ where people can trade Bitcoins.
To Regulate or not to Regulate?
The FAC is for regulation, at least for some parts of the Bitcoin world. They said that: “Bitcoin proponents may argue that increased regulation minimizes one of its greatest advantages, namely decentralization. Recent events suggest that some flexibility should be sacrificed to address obvious problems.”
Maybe regulation is the “way to go” to create some form of stability and client safety/protection. But how will that “ policing of the Bitcoin world/transactions/whatever’ look like? This is a good question where the FAC doesn’t have an answer for. Even the Federal Reserve chairwoman Janet Yellen stated that the US central bank does not have the authority to regulate Bitcoin.
If we look to what the FAC says and the “concerns” they voiced it is only logical to conclude that the Federal Reserve and other government officials are looking to curb and regulate certain aspects of the Crypto world, and their focus lies on the exchanges. However regulation isn’t for today or even tomorrow so we will keep you updated.