MasterCard is taking its case to the British authorities that bitcoin (and its digital currency brethren) needs additional regulation.
“In the current environment we feel that the risks of digital currencies outweigh the benefits,” the company wrote (in a letter digital currency website Coindesk managed to obtain). The letter was a response to a recent request for information put out by British Treasury authorities.
“We would argue that, when compared to MasterCard’s network, the claims pertaining to the speed and safety of digital currencies [do] not hold up, not least given that on average it takes 10 minutes for a block to be verified and that digital currencies are far more susceptible to hacking attacks,” MC noted in its letter.
The firm further noted that while bitcoin is a “lower cost” form of currency exchange, that is likely because bitcoin is not regulated in the same way its competitors are: “Providers of digital currency services do not currently bear any compliance costs, whereas providers of other forms of electronic payment bear the cost of complying with consumer protection laws and anti-money laundering laws.”
MC further noted, through a spokesperson, that the letter was “developed to help them understand the policy issues around virtual and anonymous currencies.”
Bitcoin is a competitor of MasterCard’s – after a fashion, in the same way a bike competes with a car in a road race – but they make a point worth considering. If traditional FIs that issue credit, make loans and facilitate money transfers have to follow a variety of stringent rules, it is not clear why bitcoin and other startups should get a pass.
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