Bitcoin has the “potential to provide tremendous benefits,” according to a U.S. regulator who is urging the federal government to develop a “flexible and rational” regulatory system for the virtual currency.
Commodity Futures Trading Commission Commissioner Mark Wetjen wrote in an op-ed in the Wall Street Journal Monday night that the federal government should build an appropriate regulatory scheme while Bitcoin and other digital payment systems are still new and relatively small, and that the CFTC has the power to do so.
Bitcoin, which was developed in 2009 and is a decentralized, peer-to-peer system based on cryptography, remains mostly untouched by the U.S. financial regulatory apparatus.
But regulatory agencies have taken an interest in the virtual currency as it has gained users and acceptance among some businesses. The CFTC held a hearing on virtual currencies in early October.
Wetjen, formerly an aide to Senate Majority Leader Harry Reid, D-Nev., said in his op-ed that Bitcoin could provide significant benefits to people without access to traditional bank accounts, especially those who rely on mobile payments.
“… Bitcoin — or something like it — has the potential to act as a disruptive innovation, including in derivatives markets,” Wetjen noted. The CFTC oversees U.S. derivatives markets.
Taking note of some of the crimes that have been facilitated by Bitcoin, which allows for semi-anonymous transaction, as well as some of the ripoffs perpetrated on early adopters, Wetjen says there is a role for regulators in policing virtual currencies markets.
Nevertheless, he writes that regulators “should work quickly to understand how these technologies work and how they affect specific regulatory jurisdictions, with the ultimate goal of creating a regulatory framework should the public begin adopting or using these technologies in greater numbers.”
