Regulation Means The Bitcoin Gold Rush Will Not Happen In The US, Say Experts

bitcoinsEurope is better positioned as a better place to create Bitcoin-based startups than the US. That was the message coming out of Bitcoin London toay, the first major conference in London to cover startups, investors and business models. Covering the broad sweep of businesses, technologists and institutions involved in the Bitcoin space, the conference heard that the US may have made a fatal strategic mistake in classifying Bitcoin as if it were money so early on in its development.

What has emerged is that Bitcoin is being treated in many different ways: as money, as an asset class, as the first highly secure P2P global information exchange, as a technology platform and even as a if it were a startup entity in its own right.

Constance Choi, General Counsel with Payward sounded exasperated on stage at the conference: “Having to explain Bitcoin at Federal and State level is a nightmare.” She said the Treasury response was that the 50 State system is just “a fact of life”, a “a barrier to entry” and it up to the Bitcoin sector to survive.

“There is incredible potential for Bitcoin if not as a unit of exchange but as a secure global network for information exchange,” she said.

But despite this potential to be many other things, she said FinCEN (the Financial Crimes Enforcement Network) has basically said “Bitcoin is not money, but it is in the ‘money bucket’.”

“You see competing voices for jurisdiction [at government agency level]. You can call it money or a payment instrument. There are lots of different labels on Bitcoin.”

She said that although regulators in the US don’t think Bitcoin is money “it acts like money so it’s being treated and regulated in this way.”

In the UK the Financial Services Authority doesn’t consider Bitcoin to be ‘fiat’ money or eMoney.

And at a wider European level, the European central bank has taken the view that Bitcoin is not money and doesn’t require regulation yet. That turns out to be a huge advantage for Europe.

“There’s been a more reasoned approach in the EU… Because these are no regulatory regimes there is a lot of room to work out which rules might fit in and what rules should apply.”

Choi said the US is “5 years behind the EU” in payment innovation.

Her comments were backed by at the conference by Bitcoin Foundation General Council Patrick Murck, who said competition between US government agencies to regulate Bitcoin was creating barriers for the ecosystem to thrive.

Certainly there appears to be early signs that Bitcoin startups may desert the US for less regulated climes.

Speaking to TechCrunch at the Bitcoin London Conference, Jonathan Rouch, founder of Bits of Gold in Israel, said he has no plans to launch his service for creating Bitcoin liquidity in the US because of the potential for regulatory intervention.


What Happened The Last Time Gold Traded Here?

In November 2009 the IMF decided it was an opportune time to authorize the sale of 403.3 metric tons of gold. Very quickly after announcing this China, India, Russia, and some EU central banks piled in snapping up the IMF‘s offer. The current price of gold is around CNY7,300 per ounce, exactly what it was when China last loaded the boat…



and remember, China does not seem afraid to add on lower prices (hhm buy low?)

Charts: Bloomberg


Former White House Official – Expect More Government Theft

Today the former Special Assistant to the President of the United States for Economic Policy and former member of the U.S. President’s Working Group on Financial Markets issued a disturbing and even frightening warning to King World News to expect more government theft going forward.  While in the White House, Dr. Philippa “Pippa” Malmgren served as financial market advisor in the White House and functioned as the liaison between the White House and the Federal Reserve.  

Dr. Malmgren formerly headed the Global Asset Management business for Bankers Trust in Asia, out of Hong Kong, and was also Chief Currency Strategist for Bankers Trust Company, and former Head of Global Investment Strategy at UBS.  Dr. Malmgren was also a senior consultant to Deutsche Bank, and currently advises the largest sovereign wealth funds, hedge funds, and pension funds in the world.  Below is what Dr. Malmgren had to say in the third and final of a remarkable three part interview series which has now been released on King World News. 

Dr. Malmgren spoke about government theft going forward:  “Look, we are in a world where every major industrialized government doesn’t have the funds to deliver on the promises they’ve made to the public.  So they are going to reach for the public’s cash in different ways….

“Some of it is through higher taxes.  Some of it is what I would call ‘expropriation,’ although taxation and even inflation are a version of that.  But for example, Portugal, about a year ago, announced that they were nationalizing three of Portugal Telecom’s pension funds and placing the assets on the government’s balance sheet so that the government’s balance sheet would look better for the purposes of negotiating with the EU.

Now, were those pensioners expropriated?  Yes.  It made page 14 of the Wall Street Journal and the Financial Times, as if it was a non-event.  But I think what we saw in Cyprus, a really overt expropriation, we are going to see that come in lots of different forms (going forward).  Some of it will be obvious like Cyprus.  Some of it will be subtle like Portugal, but what’s sure is that it’s happening.”