Mark Wetjen, a member of the Commodity Futures Trading Commission (CFTC), wrote an opinion piece for The Wall Street Journal in which he highlighted the potential of bitcoin.
He wrote: With a market capitalization of around $4.4 billion, Bitcoin represents a tiny fraction of the U.S. financial system. But as Jerry Brito, director of the think tank Coin Center, said at our public meeting, Bitcoin has the potential to provide tremendous benefits to the under-banked and un-banked, particularly in emerging markets where traditional financial services often are not available. Bitcoin is likely to be an especially powerful resource for people who rely on mobile-payment systems on their smartphones.
Bitcoin or similar technologies can be used as platforms for financial innovation in the digital transfer of currency, securities, contracts and sensitive information. Such innovation could play a fascinating role in the derivatives markets as well as financial services more broadly.
Regulators should work quickly to understand how these technologies work and how they affect specific regulatory jurisdictions, with the ultimate goal of creating a regulatory framework should the public begin adopting or using these technologies in greater numbers. Creating a flexible and rational regulatory framework also is the best way for regulators to respond to previous incidents such as Mt. Gox, Liberty Reserve or Silk Road—serious innovators will choose to work within such a regime in the U.S. rather than avoid it, which in turn will build more confidence in consumers currently leery of embracing the new technology, or something like it. That will lay the groundwork for future innovation in virtual currencies.
This is yet another sign that government agencies are not necessarily inclined to stifle Bitcoin but they would rather come up with rules that would prevent blow ups such as Mt. Gox. The problem here is that these agencies are not necessarily versed in technological innovations such as Bitcoin. But it also turns out that at least some members of these governmental bodies, such as Wetjen himself, are actively considering what cryptocurrencies are and how they can work in the regulatory landscape we have.
Over time, we would expect more and more research on Bitcoin done by regulatory agencies, more of them getting up to speed on what Bitcoin is and what it’s not. This means that the perception of the currency will actually visibly change from something that the agencies are wary of to a known way of making payments. More regulation might prove a way to establish an environment in which companies will become interested in this way of accepting payments.
For now, let’s focus on the charts.