In their primer for policymakers, Jerry Brito and Andrea Castillo propose two avenues of regulation. First is regulation by the Commodity Futures Trading Commission (CFTC). Bitcoins could certainly qualify as a commodity because they are articles that can be traded and made subject to futures contracts. Second is Electronic Fund Transfer regulation. Under the Electronic Fund Transfer Act (EFTA), the establishment of the respective rights and responsibilities of consumers and financial institutions in electronic fund transfers is to be made. Although Bitcoin is not a “financial institution” by design, the authors suggest the online virtual wallet services could fit the definition of “financial institution.” [4]
Brito and Castillo then summarize their report by making two policy recommendations. First, do not restrict Bitcoin. Although criminals have utilized the online currency, it is neither good nor bad. It is neutral. As the Bitcoin economy grows, legitimate uses of Bitcoins will likely dwarf criminal transactions. Moreover, attempts to restrict Bitcoin technology will only harm legitimate uses while leaving unlawful uses largely unaffected. Instead, governments would forego the opportunity to regulate intermediaries in the Bitcoin economy. Additionally, even if the United States decides to prohibit the use of Bitcoin, many other countries may choose not to; thus, putting itself at an international competitive disadvantage in the development/use of what could be the next-generation payments system. [4]
Second, policy makers should normalize regulation and encourage further development within the Bitcoin system. Brito and Castillo advise that it would be much wiser to take a calm approach to the challenges presented by the digital currency. Not only would this allow law enforcement to help prevent future uses of Bitcoin for money laundering, but it would also allow society to enjoy Bitcoin’s benefits (i.e. providing financial tools to those without access to banks or other “traditional” financial institutions). As we have discovered, Bitcoin doesn’t perfectly fit into any one existing classification or legal definition. Therefore, policymakers should consider developing a new category that takes into account the technology’s unique nature. [4]
Additionally, if the deep web is considered to be its “own” space, Congress should authorize a specific court or courts to have jurisdiction over causes of action that accrue online. For instance, the Federal Interpleader Act gives district courts jurisdiction over specific situations in which residents of multiple states have claims on the same insurance policy. Similarly, organizations devoted to online money laundering would greatly improve regulatory efficiency and decrease cyber crimes. [5]
Second, policy makers should normalize regulation and encourage further development within the Bitcoin system. Brito and Castillo advise that it would be much wiser to take a calm approach to the challenges presented by the digital currency. Not only would this allow law enforcement to help prevent future uses of Bitcoin for money laundering, but it would also allow society to enjoy Bitcoin’s benefits (i.e. providing financial tools to those without access to banks or other “traditional” financial institutions). As we have discovered, Bitcoin doesn’t perfectly fit into any one existing classification or legal definition. Therefore, policymakers should consider developing a new category that takes into account the technology’s unique nature. [4]
Additionally, if the deep web is considered to be its “own” space, Congress should authorize a specific court or courts to have jurisdiction over causes of action that accrue online. For instance, the Federal Interpleader Act gives district courts jurisdiction over specific situations in which residents of multiple states have claims on the same insurance policy. Similarly, organizations devoted to online money laundering would greatly improve regulatory efficiency and decrease cyber crimes. [5]
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