There are costs and there are risks, and for Bitcoin and ether, the risks may have just gone up, as the SEC thinks they are not subject to standard regulation. WaPo reports:
Two of the world’s biggest virtual currencies need not be regulated like stocks and bonds, a top official at the Securities and Exchange Commission said Thursday, putting to rest months of uncertainty about how the financial regulator views bitcoin and ether, the cryptocurrency behind Ethereum.
Speaking at an industry conference in San Francisco, William Hinman, the SEC’s director of corporate finance, said the two top cryptocurrencies don’t meet the criteria for regulation that the agency typically applies to traditional securities.
“Based on my understanding of the present state of ether, the Ethereum network and its decentralized structure, current offers and sales of ether are not securities transactions,” Hinman said.
Hinman’s remarks suggest that, unlike companies, which are required to educate stock investors about the health of their businesses, the developers behind bitcoin and ether face no such obligations. The basis for this conclusion, Hinman said, lies in the fact that bitcoin and ether are developed diffusely, by many unaffiliated people, rather than by a single, centralized entity such as a corporation.
I can understand the reasoning, but I wonder if lack of regulation will result in the growth of cryptocurrencies, or a drag on same. After all, your standard consumer doesn’t really want to take the time to understand the risks of using non-standard currencies, they just want it to work. The recent hack of some Bitcoins in South Korea is certainly a confidence sapper as well. While the right wing has certainly been successful in equating regulation with burden and barrier to profits, the simple fact of the matter is that a well-considered regulation is more than worth the time that goes into designing it and putting it into effect.
