Virtual currency industry preps self-regulatory organisation

Virtual currency industry preps self-regulatory organisation

With virtual currencies such as bitcoin catching the eye of governments, several firms in the field have banded together in a bid to create a self-regulatory organisation covering the nascent industry.

The committee for the establishment of the Digital Asset Transfer Authority (Data) says it wants to promote the prudent, responsible development of emerging payment networks, establish common rules to protect users, and work as a liaison among businesses, customers and public officials.

Founding members of the committee include the CEOs of BitInstant, BitPay, Coinsetter, CoinX, Epiphyte, eToro, Hub Culture (Ven), OpenCoin, Payward, QikCoin, SnapSwap, Tradehill, Yoyocard and ZipZap.

Jon Matonis, executive director, Bitcoin Foundation, says: "Self-regulatory organisations are excellent non-governmental solutions for industry best practices and the Bitcoin Foundation supports inclusive efforts to improve the quality of businesses engaged in exchanging Bitcoin."

Video: Stan Stalnaker, founding director, Hub Culture, discuss Data

Only yesterday the Bank of Thailand effectively outlawed bitcoin, admitting that it did not have the regulatory and legal framework in place to oversee the new currency.

Meanwhile, US authorities have been stepping up their oversight of virtual currencies, defining trading exchanges as money services businesses subject to laundering laws.

The committee says that if and when Data is established it will provide members with technical standards and best practices intended to prevent money laundering and ensure compliance with applicable laws.

In addition, it will develop programmes to oversee member compliance with its standards and set penalties for non-compliance as well as liaise with regulators. Members will need to obtain all required license and registrations.

An "immediate priority" for the committee will be the development of anti-money laundering compliance standards for emerging payments and virtual currency firms, says a statement.

Payments attorney Dax Hansen says: "At a time when virtual currencies are revolutionising payments through technological innovations, they also are drawing intense regulatory scrutiny as regulators and lawmakers grapple with these developments. Industry best practices and standards will contribute to productive dialogues as these innovative payment systems roll out."

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