Bitcoin Is More Than Just Money'
Lawler, Joseph, Examiner (Washington, D.C.), The
Jerry Brito's goal is to make Washington comfortable with radical change in the form of cryptocurrencies.
Brito is executive director of Coin Center, a new think tank and advocacy center. Backed by the fledgling cryptocurrencies industry, Coin Center is working to ensure that the new technology of Bitcoin is integrated into the U.S. system of laws and regulations.
Bitcoin, a peer-to-peer, decentralized digital payment system, is so new that lawmakers and regulatory agencies are scrambling to catch up to its impact. Through cryptography and the use of a public ledger of transactions known as the "blockchain," Bitcoin eliminates the need for a trusted third party to facility transactions.
Its early adopters believe it has the potential to transform payment systems, if not the entire monetary system. But lawmakers have looked askance at its early use in online crime.
Brito, an adjunct professor of law at George Mason University, has been one of the experts that Congress and Federal Reserve officials have relied on to explain the potential effects of the introduction of Bitcoin. He left the libertarian think tank Mercatus Center to focus on cryptocurrency-related issues at Coin Center earlier this year.
Brito agreed to an interview with the Washington Examiner to explain better how Bitcoin will soon be a major policy issue for Washington. The conversation has been lightly edited.
Washington Examiner: Coin Center describes itself as a "new voice for Bitcoin." Why does Bitcoin need a voice in D.C.?
Jerry Brito: It's quite simply that regulators at the federal but also at the state and international levels have been increasingly interested in Bitcoin, and where the use of Bitcoin and the operations of Bitcoin businesses might intersect with different regulations.
As government becomes more interested, there was nobody there to really be a resource to these regulators, to answer their questions, to make sure they understood how the technology works, to make sure they understood the consequences of the decisions they might make.
That's what we wanted to do, to be that voice, not for any particular company, not for any particular cryptocurrency even, but just for the freedom to innovate around blockchain technologies.
Examiner: What are some of the real-world impacts of cryptocurrencies that we'll start to see in the near term that will elevate their profile in Washington and raise the stakes for policy?
Brito: At the most basic level, cryptocurrencies like Bitcoin are useful as a way to transmit value or transmit money online, electronically. That's very basic, but it improves on existing ways to do that because there is no need for a third-party intermediary.
Before the invention of Bitcoin, in order to transmit money online, you had to employ a third party, like a bank, or PayPal, or a credit card company. With Bitcoin there is no intermediary, it's decentralized. As a result it can be cheaper and faster.
That's great for merchants and it's great for consumers, but as a result there are going to be all kinds of regulations that apply on money transmission that are going to come into focus.
These include things like anti-money laundering regulations, and consumer protection regulations of different kinds. That's sort of at the most basic level.
We already see folks using Bitcoin to buy and sell goods, to remit money to their families overseas, etc. That's already happening.
At a more advanced level, we're going to see things like Bitcoin derivatives of different kinds to hedge against Bitcoin volatility. There, for example, you see the [Commodity Futures Trading Commission] regulating these derivatives, and we already have seen the first Bitcoin swap being regulated by the CFTC.
You have the Securities and Exchange Commission now looking at a Bitcoin [exchange-traded fund] so that folks who want to speculate on Bitcoin can do so easily, without having to actually hold Bitcoin. …
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