Compliance: One of the pillars of the new economy
Bitcoin and Blockchain technology keep growing more and more mainstream. Banks, vendors, and even governments are now starting to explore the digital currency. Along with this gaining of acceptance, governments are increasingly working on ways to either incorporate companies in the space into their existing regulatory frameworks or coming up with new regulations to ensure safe and efficient marketplaces.
For companies who wish to operate in a well-lit environment this type of licensing and oversight is critical to the long-term development of the sector. However as is the case with any emerging technology, government regulations tend to lag behind the actual development.
On Open Waters
Bitcoin is not just a digital currency, it’s a decentralized open-source protocol that exists on the internet and does not belong to any government agency. It is a thriving economic system on open international waters that governments are eager to regulate. Part of the reason is of course to be able to net some tax income, but with an unregulated systems also comes fraud, money-laundering, and other illicit activity–all things that government regulation would be able to curtail if not completely eliminate.
Regulation in Practice
Given that Bitcoin is an open-source protocol, governments are exploring new ways to regulate it. Some countries have opted to adopt a hands-off approach to let the ecosystem grow unimpeded, while others are taking a gradual road to regulation.
In the US, each state approaches the regulation of Bitcoin differently. For instance, some states are currently approaching Bitcoin as if it were any other currency, while the state of New York has gone to great lengths to tailor-make a system of regulation with the BitLicense. Although still in its early days, the BitLicense definitely deserves credit for approaching Bitcoin and Blockchain with an eye to the future.
As the Chief Compliance Officer at MonetaGo, I have been actively involved with the process of making sure that our company’s revolutionary way of utilizing Bitcoin and Blockchain is compliant with regulations and bank compliance procedures in more than 40 countries around the world. The professionalism that I have experienced in applying for New York’s BitLicense shows a great deal of understanding on the part of the New York State Department of Financial Services (NYSDFS). For instance, the NYSDFS has taken the stance that the process is to be iterative, thus allowing companies to go back and forth with the Department during the application process making the licensing manageable for younger companies like MonetaGo.
Forward and Beyond
Understandably, the Bitcoin community is divided on how they feel about regulation and the “mainstreaming” of the currency. However to some extent, Bitcoin is already mainstream. Many people are using it, major merchants are starting to accept it, more VCs are investing it in it, and now more countries are acknowledging its existence. There is no turning back the clock on Bitcoin’s widespread adoption. The only way to go is forward, and working hand-in-hand with regulators and banks is critical to moving in that direction.
Originally published at patrickmanasse.com.