Financial institutions are continuing to invest in Bitcoin, e.g. DFJ Growth raised $75 million for a Bitcoin startup Coinbase from NYSE, BBVA, and other financial institutions. While at the same time banks in US, UK and Australia are calling for Bitcoin and other digitial currencies to regulated, and for the underlying protocols of the value exchange distributed ledger technology to be ‘treated lightly’.
Digital currency regulation requested
In the UK, the British Bankers Association and the Payment Council have called for more formalised regulation of digital currency exchanges and service providers in response to a government call for information. Having listed the risk of digital currencies, they suggest that one option may be to bring cryptocurrency firms under the scope of the Fourth EU Anti Money Laundering Directive as 'obliged entitities'.
Distributed ledger technology potential
The BBA and the Payment Council are well aware of the potential advantages of the use of distributed ledger that supports decentralised payments. They write, “The ledger technology offers potential opportunities to fundamentally change the way many value transactions both within and outside of the payments system are made, including the distribution and communication of assets, company shares, and securities. The ledger presents an opportunity for the industry to explore how this technology can be used to improve and enhance the existing fiat UK payment systems , or make use of the technology in a more structured way, similarly to that used in the commodity (such as gold and silver) markets. Given that the distributed ledger technology is open source and still in the early days of its development, it might be better for any ‘intervention’ on the core technology itself to be light touch, so as to support continuing innovation in a positive way.”
In Australia, PayPal have requested that blockchain apps be regulated distinctly from Bitcoin payments. They make the distinction that blockchain technology has potential far wider use than the Bitcoin financial payment structure. PayPal argue that their applications, that such as MaidSafe and Storj utilise the blockchain to create solutions for problems companies and internet users are currently facing.
CTMfile take: Distributed ledger technology value exchange protocol has the potential - as the BBA and the UK Payment Council put it, “to fundamentally change the way many value transactions both within and outside of the payments system are made, including the distribution and communication of assets, company shares, and securities.” And it really might.
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