Bitcoin Explained, Fresh Approach to Regulation Sought at New Jersey Hearings on Virtual Currency

As was expected, last week’s hearings on virtual currency at the New Jersey Assembly introduced the topic to lawmakers previously

As was expected, last week’s hearings on virtual currency at the New Jersey Assembly introduced the topic to lawmakers previously unfamiliar with it.

Coin Center Executive Director, Jerry Brito, gave an overview of Bitcoin. But common to all presenters was their emphasis on the need for regulatory certainty. In addition, a “light-touch” approach should be taken. Bitcoin should not be over-regulated and there should be a happy balance between consumer protection and giving it room for innovation.

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Marco Santori, a lawyer at Pillsbury Winthrop Shaw Pittman, outlined three ways states have attempted to regulate Bitcoin. He ended by offering what he called an alternative approach to the matter. He would like to see legislation that incentivizes Bitcoin businesses to make New Jersey their home, but with an important caveat:

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“[This] doesn’t mean building a new licensing machine. It doesn’t mean demanding compliance with a regulatory regime that was never intended to fit digital currencies. Instead, it means a well-thought-out combination of carrots and sticks that demand accountability while incentivizing new economic growth.”

Without mentioning it outright, he was likely alluding to the New York BitLicense as “a new licensing machine”. Indeed, feedback to the original proposal questioned the need for such a license, arguing that existing rules (e.g. money licensing, anti-money laundering) can be sufficiently adapted toward virtual currency. Santori, however, appears to take it a step further by indicating that conventional regulations don’t fit with virtual currency at all.

ItBit CEO, Charles Cascarilla, said that businesses will naturally gravitate toward the least restrictive regulatory environment, which is why his exchange originally set up shop in Singapore.

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