Bankers Association Makes Pitch for Bitcoin Regulations
In a letter to a group of state banking regulators, the American Bankers Association suggested the creation of a national database of bitcoin firms to help regulate the growing digital currency industry. ABA has expressed concern that a lack of regulations, along with the currency's fluctuating value, could have ripple effects on traditional banking.
There’s a lot of excitement about digital currency, and while the American Bankers Association shares that, it wants to ensure that the industry is held to a set of standards.
Last week, ABA sent a letter to the Conference of State Bank Supervisors (CSBS), an organization that represents banking regulators at the state level, suggesting that a database for bitcoin firms be created.
“Such a registry would allow regulators to verify a business’s status in other states and allow consumers to ensure that a business is registered before doing business with it,” the association wrote in comments [PDF] on a proposed regulatory framework for states issued by the conference in December. “A national database would allow consumers to quickly verify that a provider is registered and regulated.”
The letter also expressed support for the CSBS proposal that bitcoin firms be held to a number of federal rules that apply to banks, including the provisions of the Electronic Funds Transfer Act. ABA noted that such rules would protect consumers but identified challenges that would make applying those requirements to digital currency transactions difficult.
ABA also pointed to last year’s failure of Japanese bitcoin exchange Mt. Gox and the massive effect it had on the currency’s value, noting the potential impact of such failures on traditional banking.
“Although none of these failures have yet to feed directly through to the traditional payments system, as virtual currency usage grows it will become more tied to our traditional payments system,” the group stated. “In the future, such failures could have system-wide consequences.”
Where the Bitcoin Field Stands
ABA’s comments come after some shifts in the bitcoin industry’s lobbying strategy. After a series of high-profile legal issues hit members of the Bitcoin Foundation’s board last year, the trade group—responding to member surveys—decided to take a step back from public policy work and instead focus on protocols for the cryptocurrency.
Around the same time, the Chamber of Digital Commerce—with a name that references one of the largest trade groups in Washington—launched, largely taking over the advocacy role the Bitcoin Foundation once held. And last September, a third group, Coin Center, launched, also with a policy focus.
The latter group also responded to the CSBS proposal, offering a set of suggested modifications, but reacting warmly to the push for more consistent standards.
“The conference is to be commended for its forward-thinking goal: bringing consistency to state laws and thereby reducing barriers to innovation,” Coin Center Director of Research Peter Van Valkenburgh wrote [PDF]. “If the recommended modifications described above are adopted by the conference, and subsequently by the states, innovative American businesses will flourish and federal preemption will become unnecessary.”