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.

Paul Farrelly
Show Hide image

I represent a Leave constituency - but I want to delay triggering Brexit

Unlike most of his colleagues, Labour MP Paul Farrelly refused to vote for starting Brexit negotiations in March. He explains why. 

Not quite top marks, but eight out of 11 will do - for the justices on the United Kingdom Supreme Court, who have ruled that our country remains, indeed, a parliamentary democracy. 

Furthermore, they have ruled that legislation is necessary to trigger Article 50, which starts the Brexit process, not simply a plebiscite, nor a government diktat fancifully dressed up as a "royal prerogative".

Last June, my constituency of Newcastle-under-Lyme in the area home to the historic potteries industry voted 61 per cent to 39 per cent to leave the European Union. Yet in December, I was one of just nine Labour MPs to vote - twice - against rushing for the door by the end of March, come what may.

It was the third time since 2015 that I’d defied the Labour whip (quite modest compared with our leader’s record). The last was when - with the Tories’ true statesman, Ken Clarke - I refused to vote for the legislation paving the way for the referendum in the first place. 

I thought it a reckless gamble with our country’s future, which profoundly disregarded the lessons of the past. Six months down the line, I now realise that, of the "December nine", I was the only one with a Leave majority (though not a majority of all voters) in my seat.

Why? Was it a political death wish? A deliberate slap in the face for my electorate, who have returned a Labour MP now since 1919?

No, it simply made no coherent sense to hand the government a blank cheque before Christmas, before we'd seen what Prime Minister Theresa May wanted to achieve, and given our verdict in the national interest. 

Does that make me – like the judges again, no doubt, according to Ukip, some Tories and the Brexit press - an "enemy of the people"? Certainly not. 

My parliamentary next door neighbour Sir Bill Cash, doyen of the anti-EU lobby, has spent the last 40 years defying the "will of the people" from the overwhelming 1970s referendum. So I think we "rebels" can be cut a little slack for wanting to ask a few hard questions to hold the government to account.

On the face of it, Labour’s continued, official support for the government’s timetable renders today’s Supreme Court verdict of little practical consequence - in the Commons, at least. 

In December, our front bench had tried to be clever, crafting a mild motion calling for debate on a published plan before Article 50, to stir a Tory rebellion. But the PM smartly agreed to the demands, tacked on her timetable and Labour got trapped into riding her coat-tails. 

But at least now, through amendments to a government bill, we’ll have the chance – and so will the Lords – to influence the terms of departure, and who in the future has the final say.

In the PM’s speech a fortnight ago, I was pleased with her commitment to protecting the UK’s science base. Last week, I was at the opening of the fifth Innovation Centre at Keele University’s Science Park on my patch, for which European funding has been vital. That’s been hammered out, until 2020, but what happens further out is wholly up in the air. 

I was happy as well, of course, with the passage on workers’ rights. Ten years ago, I introduced the Private Member’s Bill to stop abuse of agency workers – a Labour 2005 manifesto commitment – which was then delivered at European level. That was aimed directly, too, at tackling the sort of levelling down that, all those years ago, was already stoking anger at immigration in areas like mine.

But these were, really, just warm words for the wider audience. The key concerns for our industry, local and national, about tariff-free trade and access to the single market are still there in spades. And in the 21st century economy, we have not squared "control of our borders". The demand for skills, not least when incomers from outside the EU – the element the government ostensibly can limit – formed the majority in the last statistics.

The reality is that, once Article 50 is triggered, the government will not control the agenda.  That will be in the hands, like it or loathe them, of the other 27 member states. 

The PM’s statement was workmanlike, with no real surprises; but what hardly helps the negotiations are the frenzied Noises Off-style gaffes. For Boris Johnson to liken any French President, on his way out or not, to a Colditz camp guard just stores up more trouble for tough times ahead.

In my formative years, way before politics, I organised international youth exchanges. Every summer, teenagers from all over Europe gathered to tend war graves in Berlin – where wounds of conflict were still fresh, and the Cold War divided the city by the Wall. 

My involvement came from growing up in Newcastle - in Staffordshire, where the German cemetery from both world wars lies next to the Commonwealth memorial on Cannock Chase. I grew up believing that the European Union and its forerunners, for all their frequent frustrations, were part and parcel of the architecture of peace, not just prosperity. 

Those loftier arguments, however, got lost sadly in the bewildering trading of facts and fictions in the referendum. "Turkey, population 76 million, is joining the EU. Vote Leave." Well no, it’s not, but those huge, bright red posters certainly changed the tone of the debate in the last few weeks on many a street last June, not just in Newcastle-under-Lyme.
 
After a narrow 52 per cent to 48 per cent Leave vote, we are now, though, where we are. 

For Labour, on our front bench Keir Starmer has been trying to make the best of a bad hand. Thanks to the Supreme Court, he now has an extra card. But I still just don’t like the way the dealer has stacked the deck.

Paul Farrelly is the Labour MP for Newcastle-under-Lyme. He has sat on numerous select committees, and currently sits on the Culture, Media and Sports committee.