A hearing Tuesday on the regulatory future of bitcoin instead turned into a forum on the shortcomings of the traditional banking industry.
The hearing, called by New York state’s top financial regulator, Benjamin Lawsky, gave five bitcoin advocates the chance to discuss what they view as the advantages of bitcoin over current systems of moving money.
“Solutions don’t really come from the current industry,” said Cameron Winklevoss, who, with his twin brother, Tyler, has invested in bitcoin companies. The two were early players in Facebook.
When Lawsky asked about efforts by banks to create their own bitcoin alternatives, Fred Wilson, a leading venture capitalist at Union Square Ventures, doubted that anyone would build software around a currency created by the conventional banking system.
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“No one is going to build on top of JPMorgan Chase’s bitcoin,” he said.
The hearing underscored how ambitious bitcoin advocates are in their desire to create a new payment system. Lawsky has proposed the creation of a BitLicense for virtual currency firms, but the concept barely came up Tuesday.
Hanging over the hearing was the criminal complaint unsealed Monday against a leading bitcoin entrepreneur, Charles Shrem, and a business partner, who were accused of helping people buy drugs online using virtual currencies. During the hearing, the bitcoin Foundation, where Shrem was vice chairman, said in a statement that Shrem had resigned.
Lawsky said the arrests showed the potential that virtual currencies have to lead to illegal activity. But people testifying said that Shrem’s arrest showed that current laws were enough to stop wrongdoing.
In the end, the panelists spoke about bitcoin as a force for good in the world.
“It’s about freedom, ultimately, and whether you want to live in a society that embraces innovation and free speech and freedom or not,” Wilson said.
Tyler Winklevoss echoed that: “Back to what Fred said: Bitcoin is freedom. It’s very American.”