The big fish in crypto-currency are setting the scene for major upheaval.
The newly formed Digital Asset Transfer Authority (DATA)
, a selection of figures in the crypto-currency community whose aim is officially “to outline opportunities, to better understanding, and to unite the industry around sensible outcomes for development of digital asset technologies”
, held its first Annual Meeting on 9-11 April in Washington DC.
This was the first occasion when DATA community and board members gathered in one place with the IMF and World Bank, with keynote speeches by Benjamin Lawsky, New York State Superintendent of Financial Services, and David Andolfatto, Vice President of the Federal Reserve Bank of St. Louis who has recently been somewhat vocal
on the issue of Bitcoin’s future.
Ahead of the meeting, Bitcoin Foundation General Counsel Patrick Murck spoke about the desired outcomes:
“We will plant a flag so that people can see that DATA exists with real people behind it,” he said, “we’ll educate people and create a two-way dialogue”.
Creating such a rapport between the big players of the cryptocurrency world and lawmakers will no doubt be a difficult thing to achieve.
DATA’s website contains a selection of somewhat vague, idealized statements from some of its members. “DATA will help to define the next generation of digital finance,” “We believe that the Digital Asset Transfer Authority can advance and coordinate the efforts of market participants” and “We wholly support this organization’s goals of promoting responsible self-regulation in the emerging payments market” are some examples.
The difficulty with such entities, however, lies in producing legislation ‘with teeth’ without causing further friction between the parties involved. In light of the IRS’ move to force US crypto-currency users to pay tax on their transactions, officialdom and the decentralized movement seem to be drifting further apart with each stroke.
Murck’s words prior to the meeting were more interesting. “The first thing I would like to see is to develop a framework for how to analyze Bitcoin issues,” he said, referring to a study by Jim Harper outlining “all possible threats” to Bitcoin and how they could be cast aside.
“The second thing we need to do is set best practices and standards for Bitcoin exchanges […] They have a need to have their own voice in the conversation. To have credibility they will need to have best practices and standards that are adopted by Bitcoin exchanges.”
This response is perhaps somewhat unexpected from the Foundation, for it unveils a plan to attempt to regulate a decentralized industry whose essence lies in mutual cooperation as an alternative to the prescribed rulebook.
A further hurdle is forcing exchanges to accept the legislation and abide by it, and having the necessary mechanisms to monitor exchanges’ behavior.
Such intricacies have yet to be thrashed out, of course, and it will be interesting, if rather disconcerting, to see their effects play out on the system in future.
Ahead of the formation of DATA last year, the scheme was decried across the community, EconomicPolicyJournal.com
heralding “disturbing Bitcoin news”
and “players within the Bitcoin arena […] attempting to regulate the industry”
The article points to the potential for the main figures in DATA to create legislation with government which prevents input from others further down the chain and in turn would introduce a monopoly-esque rigidity to crypto-currencies’ evolution in the US.
However, it would be tantamount to delirium to assume DATA will simply empower its main personnel at the expense of part of the system.
What the future holds for crypto-currency legislation is, however, most likely a very precarious state of affairs, especially if laws are enacted to govern exchanges and other parts of the decentralized network.