Many people fear bitcoin regulation. Jaron Lukasiewicz, who started bitcoin trading platform Coinsetter back in 2012, isn’t one of them.
With Coinsetter based in New York City, you might think Lukasiewicz might be concerned about bitcoin regulation.
But he’s not — he thinks that US regulators providing bitcoin companies with a framework to operate in is a good thing.
Lukasiewicz recently took questions onZapChain. Here’s what he said about regulation, Wall Street and holding onto BTC:
1. Exchanges Need to Cater to Wall Street
While the San Francisco Bay Area has become a hotbed for bitcoin startups, New York has major finace-related benefits. Lukasiewicz says since Coinsetter is a bitcoin exchange, it’s the best place for it to be based.
“For any company involved in bitcoin trading, NYC is the place to be. There are a number of large trading firms and institutional Wall Street firms looking to enter the space over the next 24 months — this is where things are happening.”
2. The BitLicense Will Help Bitcoin Exchanges
Many believe the New York Department of Financial services’ regulatory framework for digital currency, the BitLicense, is too restrictive. Even so, Lukasiewicz says regulation will help US bitcoin exchanges succeed.
“The BitLicense will help bitcoin exchanges offer domestic bank transfer options to customers, so it is pretty important.”
3. The BitLicense Could Help Bitcoin’s Value
A framework of rules and regulations in bitcoin would increase interest because it could better protect investors from fraud. As a result, Lukasiewicz thinks bitcoin’s price would rise with more regulatory clarity.
“The BitLicense is one step towards having institutional money flow into the space, but bitcoin itself still has to provide value. For institutional traders, this means that the market provides a sufficiently large profit opportunity.”
4. US State Regulations Are Tough
Money services businesses (MSBs) licensure are what regulates bitcoin exchanges on the state level. This means bitcoin exchanges are expected to be licensed in almost every US state since they are required — a huge hassle.
“MSBs must obtain licensing on a state-by-state basis, and some states will wait another two years before making licenses available for bitcoin companies. New York State will hopefully make the BitLicense available by the end of this year.”
5. The Regulators Are Causing Regulation Delays
While some don’t like the idea of bitcoin regulation at all, others chafe at the idea it’s taking too long to get any sort of set framework. Lukasiewicz said this is because the regultory environment in the US is so complex.
“I agree that it’s frustrating to keep waiting for regulation to emerge, after promises that it’s coming ‘soon’. One thing that I’d point out is that there are many regulators who affect the industry.”
6. Bitcoin ETFs Have a Hill to Climb
There are currently two efforts to make bitcoin more accessible in the form of Exchange Traded Funds, or ETFs. But the reason why this is taking so long, according to Lukasiewicz, is becaue of differing regulations.
“The regulators of Barry Silbert’s and the [Winklevoss’] offerings are different [than] those that regulate a bitcoin exchange. Those offerings are subject to SEC/FINRA approval, whereas bitcoin exchanges are regulated as MSBs and subject to different licensing requirements.”
7. Bitcoin Exchanges Are Expensive
It’s undeniable one of the key pieces of infrastructure the bitcoin industry needs are exchanges. But in order to build one properly, Lukasiewicz says it costs millions of dollars.
“It’s very difficult. If you build one properly, it will cost $1.5mm to 2.5mm to build the technology alone. Any exchange that exists today an amazing job at beating the odds in a highly competitive market.”
8. US Versus UK Regulation
The government of the United Kingdom is moving quickly to provide answers for bitcoin regulation. However, Lukasiewicz thinks the United States’ financial system is still a better place for bitcoin to prosper.
“True, UK regulation is better, but banking is better in the US than it is in the UK. I believe that the BitLicense will allow bitcoin companies to grow in New York, which is very exciting.”
9. Bitcoin as Currency is Possible, Not Likely in US
Can bitcoin compete with the US dollar? Unlikely, says Lukasiewicz. Yet countries with systematic financial problems may want to adopt something stable like bitcoin, and some countries like bitcoin’s blockchain technology.
“I can see bitcoin having usefulness as a currency in some countries, however, I don’t see it competing with the US dollar and other major world currencies. I do believe decentralized cryptographic technology will be used by governments to improve currency technology, though.”
10. Holding Bitcoin is Not Always Easy
Should you hold bitcoin? For some people, it’s easy to ride the ups and downs of bitcoin’s price. However, some who work in the industry find keeping bitcoin as an asset is too stressful — Lukasiewicz is one of them.
“I entered bitcoin in 2012, started Coinsetter in 2012, and bought most of my bitcoins in 2013. I used to hold nearly all of my personal funds in bitcoin as a medium-long term investment but have changed that to reduce risk. Being all bitcoin is a stressful lifestyle, especially when your company is strongly tied to its price as well.”