As a growing number of businesses and consumers turn toward digital currencies, they are getting more attention from the United States Consumer Financial Protection Bureau (CFPB).
In a recent report by the Government Accountability Office, it was proposed that the bureau needed to take on a more active role in developing policies for digital currencies. These policies would be focused on maximizing consumer protection and would be tailored toward minimizing fraud and security issues for bitcoin users.
While bitcoin’s biggest advantage is the powerful security associated with it, there have been incidents where this security has been breached. In Tokyo, an exchange went completely bankrupt because it lost its user accounts to hackers. While these incidents are not widespread, measures and policies need to be implemented. This is especially true in light of the fact that virtual currencies are becoming increasingly popular and their usage is on the rise.
The report emphasized on the need for an active role in terms of legislation and policies.
Delaware Democratic SenatorTom Carper said in a statement:
“All sectors – law enforcement, industry, relevant regulators, and consumer protection agencies –must come to the table and engage in meaningful dialogue to provide clear rules of the road for entrepreneurs, investors and consumers alike.”
Approximately between 50,000 and 60,000 bitcoin transactions take place per day indicating the widespread use of bitcoins. The need to overhaul the existing financial system to incorporate virtual currencies within its domain seems like a smart move to the bitcoin community. However, it is important to note that one of the biggest attractions to bitcoins and digital currencies is the minimum involvement by the government and banks.
Although measures should be implemented to ensure the safety and security of consumers and investors, it should not result in too much control, posits some proponents of the peer-to-peer decentralized virtual currency. In other words, government involvement should be restricted to anti-fraud measures but private currencies should remain that – private.
In fact, an ongoing survey of bitcoin users indicates that the greatest fear of the bitcoin user community is regulatory and legal intervention. One of the biggest motivators for new bitcoin users is a lack of politics involved in its usage. Transparency, privacy and freedom are some primary characteristics that appeal to users and this should not be put at risk by over-regulation and interference from regulatory authorities and the government.
Nevertheless, it is becoming increasingly apparent that as virtual currencies gain popularity, it is inevitable that the attention and focus of the government will increase.