War of the Exchanges: Marc Andressen vs. NASDAQ
The fate of Bitcoin, at least for the near future, might be decided within the next few months.
The fate of Bitcoin, at least for the near future, might be decided within the next few months as efforts to create the first registered Bitcoin exchange and leading the way, according to the New York Post is Marc Andressen, Founder of Netscape, internet trendsetter and venture capital expert. Because the NASDAQ is a prominent American exchange that focuses on tech-stocks, outside attempts to create a competing exchange are being frowned on in boardrooms on Wall Street.
The contention is centered on the fact that the NASDAQ has plans to launch its own fully regulated stage for Bitcoin investors sometime during the next year. The plan seemed like a good one because the NASDAQ had already made inroads in the Bitcoin community when it accepted Winklevoss Bitcoin Exchange Traded Fund (ETF) to be listed on the exchange.
On top of all this New York State is planning to release its new rules, which will focus mostly on cyber-security and consumer protection, within the next few months and Benjamin Lawsky, head of the Department of Financial Services has put out a request for inquiries from prospective Bitcoin exchange.
Apparently according to the Post there have been movements in this direction, albeit quiet ones, for several months. NASDAQ has been evaluating the different ways that the exchange can take advantage of the potential profits that can be earned with Bitcoin. The new potential challenge of competing exchanges offered by Andressen could very well force NASDAQ to speed up its plans to implement the new platform.
The final draft of the new regulations is expected to be release sometime in early July according to the Post's sources with the State of New York. One of the prime driving factors in this new interest is the rapidly spreading acceptance of Bitcoin not just by consumers but by merchants as well - a movement that Wall Street will definitely want to cash in on.
Andressen is a seasoned venture capitalist but his attempt at competing with the stalwart exchange is being dubbed by the media as a “David and Goliath” battle. If NASDAQ decides to jump into the Bitcoin pool it will do so in the very near future. Even though this could stifle Andressen's plans, NASDAQ opening its doors to cryptocurrency will certainly give Bitcoin and all other digital currencies a huge publicity boost while eliminating the doubts of many potential investors.
Once Bitcoin gets to this point, its value will begin to depend on customer satisfaction, uptake and ubiquity more than novel interest, after which real competition between cryptocurrency and fiat currency’s can begin in earnest.
The main problem that Andressen will have in starting his exchange, when competing against the NASDAQ is going to be the Bank Secrecy Act of 1970. If a potential exchange is to be approved it must have three resources: Intellectual, monetary and human.
These requirements will be no problem for one of the largest exchanges in the world, an organization intimately familiar with the dreadfully complicated exchange rules, will have little trouble meeting. The human resources are the hardest to fill because they require experts in issues such as money laundering and proper reporting and most of the experts already work for exchanges like the NASDAQ and Dow.
While no Bitcoin stock exists yet, investors can still currently purchase stock in Bitcoin Shop Inc. that is currently being traded over the counter at the OTCQB:BTCS. The OTC, unlike the New York Stock Exchange (NYSE), is not centralized because the companies are usually smaller and trade via dealer networks.
Companies such as Bitfury, which recently announced that it had secured $20 in Series A Financing are seeing VC’s flock to their cause because they are seeing immense profit potential in the promising new economy. Indeed, many Bitcoin startups are starting to successfully replicate some of the services typically associated with the world of finance. For example, Bitcoiners can now short BTC companies and even move their coins to an offshore tax haven.
Therefore, with myriad of opportunities opening up for Bitcoin investors and promising companies such as Bitfury whose ASIC mining chips account for 40% of all Bitcoins mined, prominent exchanges like the NASDAQ might soon have to abide by the old adage: “if you can’t beat them, join them.”