Fewer startups. A drain of top talent. Jobs and opportunities pushed overseas.
These are the nightmare outcomes that Atlantic Financial founder, 20-year Wall Street veteran and Bitcoin Financial Association member Bruce Fenton believes could befall the bitcoin industry, should US lawmakers heed calls for regulation from the bitcoin community.
Having worked under the conditions imposed by traditional financial regulation, Fenton offers an insider’s account of how detrimental these policies could be for bitcoin’s growth and ultimate longevity.
“[The traditional financial system has] seen firsthand the damages regulation can cause. Some of the people who spoke at the hearings in New York, they’re well-meaning people, they say things like ‘We need regulation’, but I don’t think they understand what they’re asking for,” Fenton said.
Fenton claimed that applying existing regulation to the bitcoin industry could adversely affect bitcoin startups – which already operate in an uncertain market – virtually overnight.
Speaking to CoinDesk, Fenton discussed what was at risk:
“What innovations have we seen in the banking or financial sector in the last 30 years? Almost nothing. Nobody ever decides to start a bank out of their garage, there is no Google, PayPal or Youtube-like innovation that’s come out of banking or finance, because it’s so scary to people they don’t even bother to try to begin with.”
A day under bitcoin regulation
Recently, Fenton has become more outspoken about his belief that regulation is not the solution the bitcoin industry needs.
Drawing on his experience working at major investment firms, Fenton painted a vivid picture of what bitcoin business owners could expect under regulation:
- All correspondences, including email, would be monitored.
- All emails would need to be saved and reviewed.
- All public speaking events would need to be approved, and all content published ahead of time.
- Certain written materials would need to be reviewed by compliance officers and regulators.
- Company representatives would need to take continuing education and be regularly fingerprinted.
Further he named the following, seemingly innocent actions as examples of regulatory violations:
- A client moves out of state, and the company reaches out to this client though they are not licensed in that state.
- An assistant answers the phone for a client who wants sell a fund and executes the order though they are not registered to.
What New York got wrong
Fenton noted it was the New York hearings that partly influenced his decision to offer guidance to the reddit community.
Speaking to CoinDesk, he reiterated that though both sides likely had the best intentions, he was shocked by some of the suggestions, such as how New York officials suggested regulating miners, simply for running free programs on their computers.
However, Fenton isn’t against regulation altogether.
Rather, he believes that many existing consumer protection laws – those that prevent harm and violence – can easily be applied to bitcoin, but this definition of regulation is far from the result that the ecosystem would see enacted.
“I understand regulators want to regulate. If they must do something in this space, there’s a lot of productive things they could do,” he said.
Choosing smart regulation
Should these parties choose to enact new regulations, Fenton had several suggestions for how they could move forward and benefit the ecosystem.
He proposed that states like New York should work with their law enforcement officials to protect bitcoin consumers from fraud, theft and hacking. Furthermore, he added that there is work that could be done to help miners and overall block chain security.
Fenton also encouraged investors and those in the community to consider what illegal actions – like theft and fraud – aren’t already enforceable in the bitcoin space under current law.
To sum up this point, Fenton asked:
“Supposed we didn’t have a single new regulation covering bitcoin, what would be the situation where we would have a victim, where a real human being would be harmed because of that?”
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