by Joe Curtis| 13 March 2014
The crytocurrency movement is turning mainstream.
Bitcoin is no longer the currency of libertarians as it comes closer to mainstream adoption, claim users.
Critics of the digital medium of exchange have labelled it an unstable anti-government tool, because it is not governed by any central bank, like fiat currencies are.
But users at the forefront of Bitcoin believe it is losing that tag as governments begin to consider regulating it.
HMRC scrapped VAT on the currency earlier this month, considering it a barrier to international competition, and traders in the currency have claimed it is only a matter of time now before it becomes regulated in Britain.
They cite its potential use as a payments mechanism, where it is cheaper and faster to transfer money than banks.
But there is also a recognised need to protect users as it becomes more widely adopted, following last month’s closure of the world’s largest digital currency exchange, Mt. Gox, after it lost an estimated 744,000 bitcoins, or $350m.
That loss pushed New York’s financial regulator to call for regulated Bitcoin exchanges this week, while today Singapore confirmed its intention to regulate native exchanges.
Cryptocurrency early adopter and director of Bitcoin startup Metalair, Kerry Fraser-Robinson, told CBR: “It’s losing that libertarian tag and I don’t think it ever really warranted it.
“People talked about it as an anti-establishment currency, but it’s not anonymous. Bitcoin actually does a better job of transfers than banks and PayPal. It’s an instrument of business.”
Tom Robinson, the director of the UK Digital Currency Association (UKDCA) who led talks with HMRC over scrapping VAT, added: “Bitcoin is going to become regulated. The average person on the street is going to want to deal with a properly regulated service, not people on the internet.
“It was probably born of libertarians but if the benefits of Bitcoin are to be opened to the masses, it needs regulation. Libertarians will still probably see it as a good tool but it is growing more mainstream.”
The UKDCA is pushing for regulation, but so far Britain’s own regulator, the Financial Conduct Authority (FCA), has stayed quiet on the matter, only confirming to CBR that it is monitoring the situation.
And IDC analyst Alex Kwiatkowski, head of financial insights for Europe, sounded a warning over embracing the currency now.
“For all the excitement around crypto-currencies, everyone (individuals, businesses, regulators, governments (local and national), financial institutions, tech providers) should tread very carefully,” he said.
“Running full-speed into something which remains opaque, complex and prone to failure is not a good idea.”
But Fraser-Robinson believes the business case to use Bitcoin is compelling enough that it may have to step in as firms begin to adopt the cryptocurrency.
“To have global access to funds, to be able to set up controls for access to my employees, these are all services my bank would charge me for,” he said. “I remember telling companies they would soon have their own websites. People looked at me like I was barmy.
“It’s exactly the same curve of adoption.”