Bitcoin – to regulate or not to regulate?

And by whom?

The virtual currency Bitcoin has pretty much taken the world by storm since it’s launch in 2009. With impressive value growth, the currency has quickly become a popular choice for traders and investors. Some have even suggested that the Bitcoin and other virtual currencies could be the saving grace for countries in dire economic straits.

In March, the world’s first Bitcoin ATM was opened on Cyprus after banks had been closed for a week. The ATM allows customers to deposit “real money” into a Bitcoin ATM in exchange for bitcoins and vice versa – making the virtual currency, a very real option for those who didn’t have access to money during the Cypriot crisis.

So seemingly, the cyber-currency seems to be taking off. Stateless and bankless, Bitcoins are not subject to regulation or fees, and therefore enjoy extreme volatility, according to its proponents. But according to regulators, this is exactly the problem.

For example, Bitcoin value recently dropped by nearly 80 per cent from an all-time high of $266 before crashing to $55 on one particular bleak April day, resulting in large losses for investors.

This prompted the US financial regulator, CFTC, to consider regulating the virtual currency Bitcoin in a bid to protect consumers against the risks associated with the currency.

Growing concerns over the online cash being used for illicit activities also led the US Treasury Department to implement new money-laundering rules, forcing Bitcoin and other virtual currency firms to comply with strict regulation.

With new regulatory scrutiny, proponents of the virtual currency might find themselves hard-pressed to maintain Bitcoins’ independence from the financial authorities.

But I can’t help but ask, are these latest moves by the American authorities, too little too late?

One Bitcoin investor recently stated that if US regulations made it hard for Bitcoin businesses to operate in the US, then they would just move to other countries and still be able to use the currency wherever they wanted.

And what’s more, bitcoins have already become a global phenomenon, reaching consumers across the world and bringing with it, it’s extreme potential for risk. So the question is how much of an impact the regulation of one state can have on virtual currencies? Rather it seems, that if Bitcoin and its competitors should be regulated, it should be by a global regulatory body. So I’m definitely hoping that the potential for both extreme growth and risk in bitcoins is acknowledged soon by more than just the US regulators. 

Whether or not you support the concept or have ever bought a Bitcoin, the matter of fact is, that a lot of other people have. And with ongoing financial turmoil, many more might come to rely on the virtual currency. So hint hint regulators, now is definitely the time to ask – to regulate or not to regulate the Bitcoin?

Photograph: Getty Images

Sandra Kilhof Nielsen is a freelance writer and former reporter for Retail Banker International, Cards International & Electronic Payments International.

Photo: Getty
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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.