Cryptocurrencies No Bubble, But Set to Trade Down - Bitcoin Foundation
Sputnik has spoken with Llew Claasen, the executive director of the Bitcoin Foundation, a US-based nonprofit organization promoting the use of cryptocurrency, about the prospects of virtual coins amid the global Bitcoin fever.
Sputnik: The head of the International Monetary Fund (IMF) has expressed some concerns that bitcoin is being used to fund illegal activity. Could regulation of cryptocurrencies like bitcoin lead to a reduction of them being used to fund illegal activities?
Llew Claasen: So I think that the narrative that cryptocurrency use cases are first and foremost driven by illegal activity has been disproven a number of different times already. There’s no evidence to suggest that most of the activity or transactions supports illegal activity. And I think that the idea that cryptocurrencies, particularly decentralized cryptocurrencies like bitcoin, can be regulated is misunderstanding the fundamental nature of decentralized networks. So that’s just a practical consideration. That’s not about should, or shouldn’t you. It’s just that you can’t. So what the regulators are attempting to do is to say well, if there’s no central location where you can apply these regulations, and to be honest with you I think it is sensible, is to say can we regulate the on-ramps and the off-ramps. In this particular case we’re talking predominantly about exchanges.
At the point when you convert from fiat currency to cryptocurrency and vice versa, should we be regulating the flows of money at that point? I think that if regulators say, well we believe that these cryptocurrencies pose risks to us and we should understand those flows, I think it is probably reasonable to expect that we will see more regulators applying those policies. I think that that is responsible. To be honest with you, I think that it’s really just about the points where it influences the existing financial system that are most relevant. So the idea, for example, that I would have a decentralized exchange of value between two parties that doesn’t in any way touch the existing financial system is something that cannot be regulated. I think that regulators are trying to do that, are going to find that it’s going to be essentially a waste of time.
Once again, it’s not because someone is trying to circumvent, it’s just the nature of these technologies. They don’t work that way. And if you’re going to regulate them because you have this strange idea, that unfortunately some financial regulators do have, which is that you are not entitled to privacy in financial transactions then these technologies are going to frustrate regulators. I strongly believe that everyone has a right to privacy in financial transactions, and just because we want privacy, doesn’t mean we want privacy so we can do illegal things. The analogy that has been used many times before is, when you go into the restroom everyone knows what you’re doing in there, that doesn’t mean that you need to keep the door open.
Sputnik: Something that’s been happening with rumors of regulation is that it’s affected the price of bitcoin. In the past month specifically you’ve had South Korea come out and say they’re introducing new regulations, or will do so, and the price of bitcoin has fallen as a result. Some people say that this is a correction, while others say this is the beginning of the bubble bursting. What is your assessment?
Llew Claasen: I don’t think that the threat of regulation is having as much of an impact on the price of cryptocurrencies as many people like to think. I do think that there is a sizeable group of fairly unsophisticated retail investors that had cryptocurrency exposure, or have cryptocurrency exposure, that they acquired in December. I think they tend to panic about these kinds of things. So there is an element of this kind of trading, but by far most of the trading has nothing to do with threat or no threat of regulation. If anything, it’s got more to do with how potential regulations will i