Jennifers boss doesn't necessarily share Jennifers views on cryptocurrency.
Just this morning, David Cohen, the Under Secretary for Terrorism and Financial
Intelligence at the U.S. Department of the Treasury and my boss delivered remarks on virtual
currency at an event in New York City, where he made a compelling case for transparency and
regulation in the virtual currency space.
However, if levels of adoption increase more
significantly, and if it appears that daily financial life can be conducted for long stretches
completely within a virtual currency environment, we may need to consider whether to apply a
more cash-like regulation to the virtual currency space.
This guy isn't the county Sheriff and it's people like him that will set the policy not Jennifer Shasky Calvery.
You don't seem to have fully grasped the implications of cryptocurrency on the "regulatory environment".
There are no counterparties in crypto = so no regulation possible. END. OF. STORY.
Sure they can stop retailers from quoting prices in one cryptocurrency over another, but that's regulating retailing not crypto. Also, one you've allowed one in the door thats the thin end of the wedge because as we all know, all cryptos are readily interchangeable once your holdings are on a blockchain of any flavour.
Regulators do not understand this (understandibly). They live in a world where everything works by counterparties - everything you "own" is registered somewhere. But you do not "own" bitcoin so you cannot possibly be regulated based on that ownership. All you have is a bunch of letters that lets you control an address - that isn't ownership in any classic sense because anybody could theoretically control that address.
Put another way, a bitcoin address hasn't got your name on it as would be required to establish ownership. You've got its name on a piece of paper which means that theoretically, 7.046 Billion other people could have as well with equivalent entitlement as fas as the term "ownership" goes.
Another this regarding your quote:
if it appears that daily financial life can be conducted for long stretches
completely within a virtual currency environment, we may need to consider whether to apply a
more cash-like regulation to the virtual currency space.
Cash can only be regulated because it ultimately ends up in a bank - hence counterparties again. At least, it needs to end up in a bank for it to be of much use for anything other than buying chewing gum or paying off hitmen.
Cryptocurrencies on the other hand do not end up in a bank and, again, lack any counterparty involvement, so no regulation possible. The idea that opaque blockchains and transparent blockchains are any different in this respect doesn't get you very far because both are as much of a threat to the mainstream banking system.
You know what the threat is ? It's nothing to do with "dark currencies". It's the fact that crypto is unlevered base money whereas fiat is highly levered credit money.
Thats the real reason authorities are petrified, not laundering. Economics not criminality.
Great post.
