In February government-nervous crypto-currency enthusiasts were given a boost when Federal Reserve Chair Janet Yellen said that she did not think the Fed could regulate bitcoin. Her reasoning at the time was that given bitcoin’s status as a financial tool that evolved and existed largely outside of the influence of traditional banking it simply fell outside of the government department’s preview.
The world, however, is a rapidly changing place and the minutes from a Federal Reserve Advisory Committee meeting in early May indicate that the Fed’s position on this subject may be evolving and that a need for federal bitcoin regulation is beginning to be felt.
The reasoning is that as bitcoin enters into it second phase of development, and as bitcoin related financial products emerge from Fed regulated banks, Yellen’s reasoning no longer applies.
“Bitcoin does not present a threat to economic activity by disrupting traditional channels of commerce; rather, it could serve as a boon ... Its global transmissibility opens new markets to merchants and service providers ... Driving capital flows from the developed to the developing world should increase consumption,” the advisory committee noted.
Their suggestion is that the Fed should treat bitcoin much the way they treat other financial services products.
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