After two days of testimony from law enforcement, investors, professors, and creators, the New York Department of Financial Services' two-day public hearing on virtual currency concluded with the consensus that NYC will be a major proving ground for the new technology. As WNYC reports, the hope is that "New York becomes a center for legit Bitcoin transaction," and the first place in the United States to regulate the virtual currency.
The stakeholders agreed that regulation must come first.
"We need to think internally about how we can be a more modern, digital regulator," Benjamin Lawsky, the DFS superintendent said. He raised the possibility of issuing Bitcoin licenses for exchange houses dealing in virtual currencies, injecting a standard for regulation to the currency that, by design, regulates itself.
Coin Desk reported that "Lawsky called the prospect of a New York-based exchange a 'double whammy' that could encourage onshore transactions while helping eliminate the bad actors and lax oversight that have so far plagued virtual currency businesses and law enforcement."
These regulations would make New York City, in particular, attractive for virtual currency technologies and promote innovation. Lawksy sees Bitcoin as particularly advantageous for New York City's many immigrant families, who often send money to family in other countries with regularity.
Despite the tone of the early testimony from Manhattan D.A. Cyrus Vance and Deputy U.S. Attorney Richard B. Zabel, the academics were mostly mum on the dire necessity of more serious regulations.
Professor Ed Felten from Princeton University noted that the government regulation could "help stabilize and secure the avenues" that make Bitcoin vulnerable to capricious price behavior and theft. Negative perceptions of Bitcoin—and consumer safety concerns—persist because of some highly-publicized criminal cases, a noticeably volatile value, and a variety of online security concerns. Bitcoin mining was also identified as a key site of possible regulation, as experts are unsure what could occur if mining were monopolized.
While highlighting the potential benefits of broader Bitcoin use, Stanford Economics professor Susan Athey identified the speed with which Bitcoin transactions can take place as one particular asset, something that would allow multiple transactions to occur internally in one business with ease, as well as serve to counterbalance the price fluctuation issues.
You can watch the entirety of the two-day proceedings right here, baby. Winklevoss Twins come free of charge.
