As reported on our digital currency site DC Magnates, becoming an advisor to bitcoin payment processing firm Bitpay and bitcoun exchange Vaurum, is former Chairman of the Securities and Commission (SEC), Arthur Levitt.
Levitt served as SEC Chairman from 1993-2001, and considered to have a pro-investor stance. His arrival coincides with the bitcoin industry in the US being in a crossroads of late as the cryptocurrency has increased its legitimacy among the public, but this has raised expectation of standards on how it should be governed.
Even among its greatest detractors who view bitcoins as a Ponzi scheme of sorts, there is much agreement that the technology behind the decentralized blockchain which powers the currency is a worthy innovation which could be the foundation in how we will be using money and exchanging digital goods in the future. Levitt’s arrival to the bitcoin scene provides an experienced hand in promoting the product’s innovation and solutions for it to fit within the current regulatory and financial systems.
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In a public statement from BitPay and Vaurum on Levitt’s appointment, the former SEC Chairman referenced to bitcoin’s innovation as he commented, “Bitcoin is a fascinating new product in the rapidly changing world of financial service.” He added, “I hope to help BitPay and Vaurum blend their new business models with core monetary methods and transparency practices in order to ensure their long-term success.”
For BitPay and Vaurum, the expectation is that Levitt will be able to further help the two firms in the goal of adapting their current and up and coming services to fit within existing regulations and financial standards. Two areas that are specifically of interest to financial companies are the creation of derivative products for digital currencies as well as digital equity. A liquid derivatives markets would be expected to offer merchants and other bitcoin users more flexibility in hedging their bitcoin transactions. In addition, the emergence of P2P decentralized exchanges, such as those created by Counterparty, Nxt and Mastercoin, have proven that the model could be used to issue new equity to the public, as well as trading existing shares.
About these future technologies, BitPay co-founder and Executive Chairman, Tony Gallippi, pointed out that Levitt’s experience will be a huge asset to BitPay and Bitcoin technology as a whole. Speaking to DC Magnates, Gallippi expanded, “Bitcoin related property, smart property, smart contracts, crypto equities are all in the future of bitcoin and blockchain technology. For those bitcoin-related financial instruments that would fall under existing regulations, yes, having a former regulator on our advisory board would be beneficial.”
Forecasting what bitcoin derivatives could be like in the future, a scenario could take place where BitPay provides its merchant customers with greater flexibility in handling bitcoin payments. Currently, nearly all bitcoin transactions at major retailers such as Dell, TigerDirect and Overstock are converted back to dollars. The result is that bitcoin prices are currently experiencing a period of downward pressure due to the excess supply. In the future, we could see BitPay customers connect with Vaurum to access derivative products allowing them to hold a portion of their bitcoins and profit off of any long-term price appreciation. These derivatives would be priced by financial institutions for which Vaurum is currently creating a network of counterparties from the financial industry to add liquidity to its exchange.