A hearing on Tuesday was called by Benjamin M. Lawsky, a leading financial expert based in New York State. Five supporters of Bitcoin were given the opportunity to speak on behalf of the company’s devotees. The meeting quickly shifted from supporting Bitcoin, to bashing big banks when the company’s advocates began attacking today’s banking environment.
Former Facebook affiliates, the Winklevoss twins, suggested that under the current banking system very little could be accomplished toward fixing the economy. The Winklevoss twins are known to be major investors in the Bitcoin Foundation.
The backlash from supports is likely rooted in the recent arrest of Bitcoin CEO, Charlie Sherm, who stands accused of knowingly allowing his currency to be used in illegal drug trades. Sherm is said to have worked in cahoots with Robert Faiella. Together, the two are accused of aiming to sell Bitcoin to narcotics dealers working through somewhat popular online black market, the Silk Road. In addition to the arrest, the public shaming of the currency by JPMorgan’s top executive, Jamie Dimon, likely fueled the fire. Dimon stated on record that Bitcoin, and currencies like it, have no real prospects despite their current popularity.
Fred Wilson, a venture capitalist, assaulted banks’ reputations with creating their own virtual currencies. Wilson suggested that no industry would be willing to build on top of a company that had such a record of ethical misconduct, pointing the finger directly at JPMorgan Chase.
The attacks on the banking industry hit their peak at the hearing when Lawsky himself took on Bitcoins’ cause and began citing some of the pitfalls of big banks. Lawsky noted that it often takes three full business days for money transfers within the same bank to be credited, a ridiculous amount of time by his standards.
Lawsky demonstrated his willingness to help create regulations that would develop the new industry, but said that laundering of any kind, especially to narcotics dealers, will not be tolerated if it has occurred.
Most responsible for the decision have made little effort to forming regulations for virtual currencies, and have even neglected to appoint someone in charge.
Mr. Lawsky said during a break that small changes would not suffice, and continued on to acknowledge he was working onthe concept of a “bitlicense” for companies who wish to operate using Bitcoin. Lawsky, being a New York regulator, holds a lot of sway when it comes to the future of Bitcoin on a national level.
One investing firm executive gave testimony at the hearing which included a threat to move the crypto-currency market to other countries more accepting of industry if the same money laundering rules that apply to big banks were enforced on virtual currencies in their beginning phases.
The Tuesday morning group was the first in a two day process. Those who testified on Wednesday were expected to shed a less positive light on the Bitcoin Company and crypto-currencies in general. The future of Bitcoin, and its implications for big banks, may rest in the hands of the currencies supporters and those who will be attacking them in the coming panels.
By Spencer Lowe
The Montreal Gazette