The case for regulation

Daniel Cawrey at CoinDesk broke down a few arguments for why government regulation on some level would be a benefit to Bitcoin.

This has been a hot topic in the US since the November 18 Senate committee hearing on digital currencies.

The basis for regulation, in his argument, comes from FinCEN Director Jennifer Shasky Calvery’s quote about mitigate risk while minimizing the burder on the currency.

Cawrey touches on three areas of concern: Crime, privacy and the banks. Here is how limited regulation could assuage those concerns.

First, the FBI and the DOJ acknowledged that Bitcoin itself is not unlawful, merely a convenient tool for criminals. Sites such as Silk Road and Assassination Market cannot exist without Bitcoin or some other digital currency, so the currency has to fall within the sphere of law enforcement’s interests.

But Bitcoin as a means of payment is not enough to facilitate crime. That’s where anonymity, or at least pseudonymity, comes in.

While US officials, ahem, concede a right to privacy, this right should not provide a mask for anyone who would, say, distribute child pornography.

The idea that banks are also underserving the needs of people in the mainstream economy was brought up by Circle found Jeremy Allaire. If Bitcoin can address those inefficiencies and provide banking to the underserved (or those simply unhappy with their banks), it would remove the current burden of “cumbersome and inefficient” payment systems.

Fair points, all, but two problems immediately jump out.

One, do we trust a government like the one in the United States to regulate a digital currency. We know how the US feels about privacy, as their actions have revealed. Lip service to privacy is straight up untrustworthy.

Second, how might the US try to claim jurisdiction over an international currency? Who is the US to impose anything on the rest of the world?