Alabama Regulator Warns about Bitcoin

Reuters Article

Joseph Borg, director of the Alabama Securities Commission, said he decided to issue the alert after reviewing dozens of complaints from around the United States from consumers who are unable to withdraw their money from bitcoin exchanges.

While Borg’s alert may help to promote consumer awareness about the risks of trading on bitcoin exchanges, regulating the marketplace is still far off, he said. Federal agencies will have to step in because the exchanges are international, Borg said.

Some states such as Alabama, however, can regulate bitcoin exchanges as money transmitters, a type of business that transfers money between businesses and individuals, Borg said.

My opinion: Obviously with Bitcoin becoming more mainstream, hackers will begin poking heavily at the source code behind Bitcoin production and exchange. As with every currency in the world, however, there will be individuals who try to exploit weaknesses found in it’s “full faith and credit”. On that note (pun intended), if you haven’t noticed in October 2013 the US government began issuing a new $100 bill for the direct purpose of making it more difficult to counterfeit.

I see the real problem to be exactly what Borg is trying to address. There is not really any central body tapped to police all the issues that will inevitably arise over time. I understand that people are infatuated with the idea that there is no such regulator which kind of gives Bitcoin its cachet; yet, problems with the currency are not going to go away. The only real way this currency model will ever be taken seriously and exchanged world-wide is when its “full faith and credit” will not longer be a concern — the core trait to any successful currency.

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