Two significant US-based bitcoin companies, BitPay and Vaurum, have signed a former chairman of the Securities and Exchange Commission to their respective advisory boards.
The Wall Street Journal reported today that consultant Arthur Levitt – who served as SEC chairman from 1993 to 2001 and was actually the longest-serving person in that role – has joined the boards in order to guide the bitcoin firms’ approach to financial regulation.
Levitt affirmed he was impressed by the “innovative energy” of the digital currency industry’s youthful representatives, but that they remained unaware of the inevitable regulatory issues their companies would face in winning the public’s trust.
Payments platform BitPay has long been established as one of bitcoin’s major companies with an emphasis on promoting bitcoin use among consumers.
Vaurum, a later entrant to the space, targets its exchange services instead at the financial industry, including banks and hedge funds. The latter company received $4m in seed funding in May.
Boost for acceptance
Levitt’s comments and board appointments could well herald a new era in bitcoin’s relationship with those regulating the traditional financial world.
Vaurum CEO Avish Bhama told CoinDesk the appointment would also help with general acceptance, saying:
“Blockchain technology is poised to transform the financial services world, but will continue to remain an intellectual curiosity until it has a compelling everyday use case. Arthur Levitt brings additional validation to the space, and we’re pleased to work with him on our financial controls, banking relationships and regulatory compliance.”
The news comes just weeks after Coinbase, another major player in the US digital currency space, appointed a former Senate aide to liaise with Congress and notable bitcoin wallet provider Blockchain hired attorney Marco Santori as global policy counsel.
Compliance increasingly important
Earlier today, the Financial Crimes Enforcement Network (FinCEN) revealed it regards digital currency exchanges as money services businesses even where no fiat currencies are exchanged or transferred outside the companies themselves.
A blog post by BitPay’s Tony Gallippi from March 2013 suggested the company did not regard itself as a money transmitter, despite voluntarily registering itself with FinCEN in 2011.
The WSJ report also suggested trust issues and “regulatory uncertainty” in both the US and China surrounding bitcoin could be responsible for the 70% price decline since the beginning of 2014.
Levitt said that while bitcoin’s emergence would prove good for competition in the finance industry at large, bitcoin firms needed to prioritize a better understanding of the technology and its implications.
Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.
Arthur Levitt image via Paramyun31/Wikipedia; regulation image via Shutterstock