 Okay, I'm John Visnior. I'm with the Brookings Institution. I'm also a professor of engineering and public policy at UCLA. So I'd like to welcome everyone to the next portion of our program here, which is a 45-minute discussion on can cryptocurrencies be controlled. So I'm going to start by just, I'll introduce the panelists in a moment, but I'll start by trying to get a level setting that we're sort of looking long term and we're looking kind of in the immediate term. I think the first internet message was sent in 1969, if I've got that right, and if five years later you had been asked in 1974 to predict exactly where that would go, it would have been very, very difficult. So Bitcoin or more generally distributed, you know, virtual currencies, distributed cryptographic currencies have been around basically for five years. So I think at least I like to have a lot of humility when trying to prognosticate exactly how or where it may go and to keep an open mind. That said, we have a very immediate task or in terms of regulation, right? The regulators can't wait for the next three or four decades to see how these things shape up. So to that question, we're going to be talking about the challenges facing regulators and to what extent cryptocurrency should be regulated. So I'm going to briefly introduce the panelists. I'll start immediately to my right is Carol Van Cleef, who is a partner in the Washington D.C. Office of Manat Phelps and Phillips, if that's correct, just since last week, right? As of yesterday. As of yesterday. So I've got that right. And she's she counsels banks, money service businesses, payments and other financial services companies on anti-money, AML, anti-money laundering compliance, and has also advised clients extensively on issues relating to alternative and emerging electronic payments products, including digital and virtual currencies, mobile payments, and so on. Immediately to her right is Simon Johnson, who I will not introduce again since we have just heard from him about an hour ago. And then to his right is John Collins, who's a professional staff member for the U.S. Senate Homeland Security and Government Affairs Committee. And among other things, if I've got this right, there's a government-wide inquiry on what they're calling virtual currencies and you're the lead staff member for HSGAC on that inquiry. So it's very steeped in this. So I'll get to my questions. A very quick vocabulary note, because we hear these things, virtual currencies, digital currencies, cryptocurrencies. So many people don't like the term virtual currency because, you know, these things are actually being used to buy real things. I will use that to the extent that I'm describing what the regulators are due, because that is the term that the regulators have been using. But in using that, I'm not making a statement that I think that's necessarily the right term, but I will nonetheless use it, because that's the point of reference for these discussions. So with that framing, maybe regulation is obviously a topic that's going to fill this 45 minutes and days and weeks and months and years in the future. But do you have sort of a three-sentence take on the best way to approach the regulation of non-fiat digital currencies, or as the Fed says, virtual currencies? I get to go first. You're here. Yes. I think most of us don't realize that the concept digital currency really goes back to the mid-90s. In 2008, the Department of Justice prosecuted the first digital currency case. And before the judge, it said, this is a wild west that we're facing, and we need to move forward on this case, which happened to be a commodity-backed currency, because we needed to get some rules out there for this area, this new frontier for money transmission. It was five years later that FinCEN really came in and said in an interpretive release last year that, oh, yes, by the way, virtual currency will be regulated as money transmission and subject to FinCEN rules as if it were a money service business. Thank you, Simon. Well, the three-sentence version is that you have to worry about protection of consumers, just like you worry about in other financial contexts. And money laundering. Money laundering is a legitimate, important concern. Those two things have to be addressed. Thank you very much. And, John? I'll take something that my boss, Chairman Carpenter, Carper often says, which is sort of it's the role of government policy to steer the boat, not row the boat. So how we do that is we steer the boat of digital currencies away from bad actors, away from illicit activities, and those who want to play in the marketplace and steer it, row it forward, have that opportunity to do so. The trick, obviously, is to create policies that allow that that are kind of nimble and thoughtful. And I think that's what we're here to talk about today. Great. Okay. So FinCEN, which is within the Treasury, and Carol alluded to this a moment ago, has amended its rules to state that the definition of money transmission services now includes the phrase, other value that substitutes for money. And under that framework, FinCEN has basically identified three categories. There's virtual currency, as they call it, exchangers, people who would exchange, for example, Bitcoin for US dollars and vice versa. There's administrators, for example, who might be issuing such currencies. And then there's users, people who just receive them or convert, say dollars into Bitcoin, use the Bitcoin to buy something and then at some point, perhaps sell that for Bitcoin or dollar. So basically what FinCEN has said that the exchangers and the administrators are money transmitters, which means they have to comply with the requirements related to record keeping and the phrases AML, CFT, anti-money laundering and combating financing for terrorism. Is that the right approach? Or not? If I can jump in and say that one of the problems we've got right now is if you spend any time in the Bitcoin community, you will know very quickly that that separation into three different areas is far oversimplified division of the community. And that there are almost as many different business models as there are people that are in the community at the moment. So the problem is that those definitions don't work neatly to address the issues. One of the problems we're up against right now is that there's a lot of time and a lot of effort trying to figure out whether you are a money transmitter or not a money transmitter. We don't get the kind of response we need from the states to get the answer on that. And as a result of this kind of demarcation, we've really, we're in a mess right now, quite honestly, because we've got a lot of the Bitcoin exchangers who have now just said I'm out of the United States because I can't get the answers from the regulators. If I get the answers, I don't have the kind of money and the time to get the regulatory structure in place. So it's forcing people off shore. And then you have others that are just spending a lot of time trying to stay out of those definitions. And what they do lose at the end of the day is they lose sight of the fact that we still have a federal statute, a criminal statute that says basically they all shall not be involved in the movement of illegal funds to or from anywhere. And that, in fact, has really been lost a lot in the community. And we need to figure a way to sort of bring all these pieces together. Great. So is Vincent got it right here? Look, the Bitcoin community has fallen behind the regulatory curve. They wanted to stay away from politics. They wanted to stay away from regulation. And now other people are defining the terms for them and the terms don't necessarily fit. They, I would suggest, need to be more proactive and define who is doing what and fit that within these broad general legal principles, which are totally reasonable, like you can't finance terrorists if you want to be taken seriously. But I think they're right now at a disadvantage because they haven't wanted to take this on proactively enough. May I jump in there? Because I think the issue that you have right now is an expense issue. For those who are actually out there doing the business, for those who want to deal with it and deal with it in a correct way, they don't have the necessary funding to take it as far as you're suggesting they should be. I've worked with a number of companies like this and they would like answers and they've been reaching out for the answers. And in fact, we have a panelist later today who has a great deal of experience in working on that. But there's a slow reaction time that they're getting from the regulators and this is staining their efforts. I think they need to organize, I don't think I need to tell this room they should organize as a trade association or even better, competing trade associations like the rest of the financial sector and bring great pressure to bear on elected representatives. That's what works generally in this democracy. But they are trying to do that. But the problem is funding and it takes money to organize in that kind of way and have the kind of influence and spend the time visiting people like John. And the Bitcoin community is short of money? Are you accepting Bitcoin for payment of your services? I'm working for free today. So I think, you know, taking a step back, I mean there are folks whose jobs and missions are in this city here and throughout the country to protect the financial system, to protect consumers. And so we have set up rules and regulations to do that. And I think law enforcement and financial regulators took a look at this technology and they said, okay, we need to set up check points. And those check points are going to be at the point in which the digital economy and the physical economy intersect. And so that has happened at the exchange level, it's happened at the administrator level with certain digital currencies and it's happened with certain other businesses that have been set up as money service businesses. And I think you sort of have a question, you know, a real reality of resources versus, you know, enforcement. This is, while sort of a growing experiment, still a pretty small part of an overall financial system which is very large. So does FinCEN have it right? I think at this point it's, unless other folks have better ideas, I think it seems to make sense right now. What about users of virtual or what FinCEN calls virtual currency? So right now, for example, if using a US dollar, somebody's making, for example, a real estate purchase and does a wire transfer for hundreds of thousands of dollars, then that regular US dollar wire transfer that gets reported and noted and so on. But of course, a similar size transfer is done in the Bitcoin or any virtual currency ecosystem. There is no reporting and oversight. Should there be reporting and oversight of very large financial transfers? And then, of course, if so, how would that possibly be accomplished given the decentralized nature of some of these currencies? So I think Bitcoin is, while not, it's pseudonymous as most of folks in here are probably aware. I mean, it's more traceable than cash theoretically. I mean, it's more traceable than cash. I think anyone who sort of was watching the seizure of the Silk Road funds, you know, there were folks on Reddit who identified where those funds had gone within hours and identified what I guess we can assume to be an FBI wallet. In terms of sort of how you concentrate on the users, again, I think, you know, the current regulatory scheme has been set up to identify, you know, again, that point of exchange, that checkpoint. You know, I think, you know, what we've been talking to law enforcement and other folks about is sort of, you know, is there anything else that you guys need or anything you guys are thinking down the line? You know, I would not be surprised if at some point there is discussion about currency transaction reports, perhaps, for Bitcoin or other digital currencies. So if you're going to go in exchange, you're going to put $10,000 into exchange in the same way that if I took $10,000 in cash to a bank, I would have to fill out paperwork and that bank would have to fill out paperwork. The same perhaps to be applied to secure cold storage, which is for folks who don't know, essentially safety deposit boxes for Bitcoin online. That does not seem to me, John Collins, sitting here outside the realm of possibility or, frankly, to be terribly onerous for some of these businesses who, I think, have a responsibility not only to protect their customers but to protect the financial system as well. You're talking about the exchanges. What I was talking about once it's already in the system. So if I put in $100,000 through an exchange, at that moment, of course, it's going to be subject to even now, right? It's got to be the reporting requirements. And once it's there, if I then take 80,000 of those dollars or the equivalent thereof in some virtual currency and I move it to someone else, then the exchanges are out of the picture, right? There is no, there is no mechanism for reporting that. My question is, should there be? And if so, how? And you're right, it's synonymous, but that doesn't mean it's easy to trace the identities, right? That's correct. That's correct. And I think there was some people in this room made no better than I did. There was a case earlier in November or December where overseas there was a black market site where it sort of shut down and took thousands of bitcoins with it and people were sort of trying to chase those bitcoins around the internet and I think ended up sort of running into some dead ends. But I do think one way that you might be able to do that, and again, this is, it's important to remember this is sort of a protocol in its infancy and the businesses around it are still in their infancy. And I think you will see solutions and folks that want to make value in this come up with solutions that again kind of give customer security and probably regulator security too. Two of those ways is, you know, Coinbase, for example, when you set up a Coinbase account, they assign you a wallet. So your wallet kind of exists in their ecosystem and they can identify you based on that because they're the one who issued it to you. I would not be surprised if at some point you have other companies that develop similar ways in the same way that, you know, I have a bank account and the bank identifies, they don't know what I do with the cash that I take from the ATM, but they do know that it's John Collins by two things. One, I have my ATM card and B, I have a PIN number. What I do with that cash at that point, again, it's difficult to do now with cash to kind of figure out where that happens. But I do think you'll have solutions and folks, if this continues to mainstream and adopt itself, that you'll have things that pop up that kind of maybe deal with these problems. We have a set of laws that have been in place since 1970 that have taken some time to flesh out as to how they apply in a sovereign currency system. I think we've been able, and as John, I think, very eloquently stated it, we've been able to identify a number of the issues related to digital currency and so it is going to be a matter of making the decision to just, you know, make those changes to change definitions in the Bank Secrecy Act so that we are, we are reporting transactions over $10,000 that other reporting requirements are also applicable in this area as well. When you turn to the state laws, you have the same kind of issue that we're up against because for currency exchange functions, for example, a lot of them really probably are better defined as true currency exchange transactions, but the problem is many state laws have defined the term to mean sovereign or fiat currency and not to incorporate this concept of digital currency and that would be a very easy fix as an immediate area in the currency exchange or the digital currency exchange area. Let me ask a tax question because tax is an interesting topic. What are the tax consequences of the mining of bitcoins and I'll give you the question is, is the creation of bitcoins a taxable event and let me give you an argument that someone might make that the IRS would certainly take a dim view of but they could say, or the IRS would probably take a dim view of, they could claim that mining bitcoins is like when an artist paints a picture and that the picture has value if it's a good artist, but that the act of creating it isn't itself taxable, right? The taxable event comes when the artist then sells the painting or whatever picture and receives money and at that point there's tax obligation and it's only when the painting is sold that that it generates taxable event for the artist. Now I suspect that would not fly with the IRS if you tried to claim that mining bitcoin had no tax consequences but let me ask, when you mine bitcoins you create bitcoins that didn't exist and all of a sudden they're your assets, what are the tax consequences of that? Or what might they be? Everyone wants to stay away from this one. You know I think the IRS is working on tax guidance, they've said they're working on tax guidance, I'd expect it probably to be out in the next few months. I mean there's a lot of smart people over there. I don't know if that is a specific question again I mean the FinCEN guidance which you know they've been putting out what are called administrative rulings every few weeks which are for those who don't know businesses will basically send them questions asking for clarifications about the current guidance and they will issue these as sort of blanket rules for everyone and they issued one recently talking about mining delineating the difference between what are called hobbyist miners and industrial miners. An industrial miner is someone who sets up a warehouse of you know computer servers somewhere in Iceland and is you selling bitcoin to you know businesses or exchanges hobbyist miner I guess is if you know I set up my computer and you know try to chug out some bitcoin transactions and hashes in my house and you know where the regulation again sort of inserts itself is when I try to sort of exchange that bitcoin for cash or if I'm selling to an exchange myself as sort of an industrial miner and you know I think what the IRS will likely address is sort of more fundamental concerns of you know if I receive bitcoin for a good or service is that income or if I hold on to bitcoin and it appreciates and then I sell it how is that taxed. I suspect that will be sort of more along the lines of what the IRS will bring. But I guess my respectful pushback that would be like receiving bitcoin is more similar to things that are already you know if you receive other forms of compensation then you know someone pays me in gold I still have to report that income right whereas the idea of actually creating a currency or pieces of a currency that's arguably newer. But I think let me just flip the analogy I don't know if I would compare it more to a guy who's sort of seeking for metal out on the beach. So I mean miners are essentially verifying transactions so if you're mine you know you've got your metal detector on the beach you're probably going to pick up a lot of trash which is great and it helps people on the beach. You might actually get a gold necklace and does the IRS tax you for finding that gold necklace? No. Now if you take it to the pawn shop and it's worth over a certain amount there's certain reporting you have to do. And that's probably an imperfect analogy to me that seems more sort of perhaps accurate than maybe the painting. In tax systems that are more focused on value added so almost everybody else who has a tax system except us I think it's the case that the tax authorities are going to see that the act there's certainly what the industrial miner does generates value added you're going to be taxed on value added. In our tax system I think it's there's a little more wiggle room. I think his mining has become much more of a business. The very least I would suggest is keep good records of what it costs to mine because mining is not inexpensive it takes computing power it takes resources electricity and so on. So at least you have a record for tax purposes into the future. I'll keep that in mind as I do my mining. That's a joke I'm not actually mining. So another challenge I think is coming down the road is that what we're seeing in the build out again in the bitcoin or cryptocurrency community generally is creation of platforms that are going to allow for transfers or exchanges between different types of cryptocurrencies and other types of digital currency. So where we might the IRS may come out with guidance on going from bitcoin to dollars or vice versa we there's another challenge out there that needs to be considered as we're looking at overall tax guidance. So let me ask a little bit about state level regulatory actions as many in this room are probably well aware New York State has been very active looking at that in fact we're going to hear from Mr. Lasky later this afternoon. They've stated that among other things they're considering a bit licensed for virtual currency transactions to address among other things anti-money laundering and also consumer protection. So the question is is state level licensing the right approach and to what extent is it the right approach because obviously there's a concern that if you get 50 potentially mutually incompatible approaches to this then that could complicate transactions that are almost always across states and even very often across international borders. So any thoughts on state licensing in the right way to do it? Well I've done a lot of work with state licensing over the years. It is 50 different states 47 have laws that regulate money transmission. We really have 40 different 47 different state laws because each one has a different glitch to it when you're talking about something that's delivered on the computer or internet you're in not only all 50 states instantly you're also in every country in the world almost instantly. So it is a very clumsy way to go about it however it's right now the only infrastructure we have for regulating something like this and efforts to move towards a federal solution for money transmission more generally has been tried for the last 20 plus years without success. I would say a state approach makes a lot of sense why worry would be that the states as in some other instances would compete to have less sensible less effective less complete regulatory systems and transactions might move in that direction. I think it's good that Mr. Loski will be here to speak for himself at two o'clock. I think it's good he's taking the initiative on this and at least from what I've seen the principles that his office articulating are pretty reasonable. Well it's important to note though that what we're talking about is the states have taken an extra territorial jurisdiction over these models so you don't need a license in just one state you need it in every state where you are touching residents in that state. So that's where it becomes a very clumsy and very expensive proposition because not only do you have to go through a licensing process in each one of those states but you also are subject to annual examinations as well as ongoing fees in each of those states. So that's where it's a real problem for these young companies because they don't have the minimum net worth they need to go into it and maintaining and supporting that kind of a regulatory structure is very difficult. Chairman Carper was a governor for eight years of the state of Delaware and calls himself a recovering governor so I think anytime states are involved I think he calls them laboratories of democracy. I think it's good to have states like New York and California sort of big states that have a lot of expertise and have a lot of more resources than I think certainly small states like Delaware and others are kind of getting in facilitating this dialogue now and I think from our perspective on the government affairs side what we want to make sure is that the feds are talking to the states and the states are talking to each other so that we do have at least some sort of national norms in terms of how these are going to be interpreted and treated. Yeah presumably if the states are competing Carol and the big states are playing in this and if they establish a regulatory framework that makes sense that enables people who live for example just in their states to transact in a way that reduces costs and people feel good about that puts exactly the right kind of competitive pressure on other states to follow suit. So I think you can have a healthy competition between regulators the problem is something like that takes time and this is a technology that time is the enemy as it's unfolding you know to wait for that type of process to unfold it could take two, three, five years. But what exactly is the rush what are we missing or losing if we don't proceed more methodically? We're losing the fact that I said earlier that we have a number of exchanges who have already moved offshore because they and they've just decided we can operate and we can function outside the United States and the US consumer is theoretically being denied the right the ability to work with you know well run well organized organizations that are in fact appropriately regulated. So I guess there's a trade-off then between providing the opportunity to the consumer sooner which I agree is sensible and being comfortable that the money transfer business or whatever you want to call it is consistent with sensible reasonable for example anti-money laundering concerns all this concerns about large just about large amounts of money passing through the system. So yes perhaps you can't have everything instantly and perhaps we've become a little accustomed to that with the with internet technologies but I don't see that the losses are enormous relative to having a sensible framework in place. Well I there is a framework in place and you know sensibility yes it's sensible the way it has functioned over the years. The problem is and we've seen this pressure coming in other ways because we now have money transmitter models that you know used to be there only a couple that really were 50 state models increasingly we've had money transmitter large companies who have internet businesses that have gotten licensed are maintaining that kind of a structure. Again they have a lot of resources to bring that to bear. What we're doing I think at the end of the day is we're really we are hindering our our our competitive our technology development because there's if I don't know if you've ever attended a Bitcoin conference but I've been to a number and the kind of energy that exists in a room with Bitcoin and other cryptocurrency individuals is unbelievable. I have not seen anything rivaled at any other type of conference and what we're doing is we're we're strangling that that that technology development in the US. But Carol you could say the same thing about biotech. I don't know if you go to biotech conferences as well but the energy around biotech and new medical medical innovation medical devices is enormous and it is absolutely limited slow restricted by our regulatory system. Now those regulations exist for good reason I think that the smart people in that industry think that it's better not to have the scandals it's better not to introduce the drugs that result in terrible birth defects you're better off having an FDA process that people regard as legitimate and that is going to protect the investors ultimately. Now I understand we don't have that in place yet for the virtual currencies but I think moving towards a system like that that encourages innovation but also protects the industry against egregious abuse private or or or any other form of abuse that that seems like it's in the best industry in interest of the industry itself ultimately. Well I'm not saying that what we're I'm not sure that we're going to gain a lot in terms of further protection of of the US consumer or US business by waiting for these slow developments to occur. Now I think it is encouraging that the conference of state bank supervisors for example has taken the lead in trying to push forward more cooperation amongst the states in this area. So there are things that are happening and I have to give the Bitcoin community you made your comment earlier about the the lobbying that there is a great deal in energy again in trying to push these changes through unlike anything I've ever seen and clearly unlike anything in the in the financial services industry but it's it is it's a slow process and I'm not sure that we are gaining a lot by by waiting. I think that the community would like some rules you know here are the rules and they're ready to play by it they're building in in many of these many of these systems they've built in AML compliant anti-money laundering compliance regimes that are better than many existing financial services companies well beyond them and they're not afraid to build it incorporated they're not dealing with legacy systems technologically. So I think there's actually a lot to be gained by by helping these companies move forward. I want to open into questions with you. Okay so I think we have a few minutes 15 minutes left I want to open up to questions from the floor we've got a gentleman in the back I see so and then we'll walk the mic around as appropriate and remember please to identify yourself and for your ask question. Hi my name is Sean Andrews. Hi my name is Sean Andrews. I run a Bitcoin teller machine distributors. I can attest to what Carol's speaking to. I'll be putting my first machine not in the United States. It's too difficult to figure out which States I can go to which States I can't. If you just look at the money transmission laws between Maryland and Virginia they're very very different. I'd like as an entrepreneur and as an investor potentially maybe some kind of definitions from Fincent that make a little bit more sense as opposed to guidelines that seem to change from month to you know several months down the road and I would just appreciate if you could comment on when do you think you might we might see some kind of standards among the States as opposed to the what the MSP MSP Association is trying to do with voluntary participation. I think that I think we're in the early stages quite honestly and hopefully Mr. Lawskeel have a little bit more information. As I said earlier the Conference of State Bank Supervisors which is sort of the umbrella organization for the State banking regulators who have in many States they have the money transmitter regulatory systems reporting up through them. They are really trying to exercise some leadership but I see that as taking you know a year or two years minimum to really bring bring together the kind of coordination what would be nice and I'd be interested in John's thoughts on this is whether there is any chance we might see a law like the one that was passed in 1994 I believe the Regal Neal Act which took us to a better system for regulating internet banking in the U.S. where we were allowed to designate one state to be the primary regulator and then to the extent that someone was operating in other States that the other States could look to that primary regulator. Do you John think there's any chance we might see something like that? You know it's difficult for us to name post offices right now so I don't know if we would be able to pull that but I do think going back to to sort of the conversation about the state bank supervisors and going back to sort of my earlier points you know I do think that the leadership that they've shown is important I mean you know these these laws and these regulations were put in place for for a reason it's because you know these instruments these businesses are taking people's money and and we need to be able to trust them and I do think sort of the ability of New York and California and other folks to kind of set up that dialogue for these banks supervisors and for my brothers and sisters in government you know going out to visit Coinbase or any number of these other sort of Bitcoin businesses is very different than going to visit a Western Union stand okay and that's sort of what that model has been set up so we're really trying to to kind of reinvent the examination rubric here and I think it's going to take a little bit of time again you know something that that my boss talks about all the time is sort of you know again the Clinton E-commerce directives and and trying to sort of formulate that nimble and thoughtful policy it's a lot easier said than done but the thoughtful part is is as important as the nimble part at times and striking that balance is important thanks very much so another that's the gentleman we've got and then I think after him we've got the gentleman in the third row here Warren Coates retired from the international monetary fund you've talked about taxation prudential regulation so on I want to lift out the AML CFT part of that and suggest I would like to see you take a big step back and ask what kind of regulation really is beneficial and makes sense none of us who work in that area believe that the cost benefit assessment comes even remotely close to yielding benefits close to the enormous cost is your question that AML CFT is your position is that its owner is generally and yes yeah yeah yes it's important anti-money laundering combating financing for terrorism right if us dollars are used to finance terrorism do we sue the federal reserve okay so is that the question if us dollars are used to finance terrorism don't I was rhetorical we don't sue the federal we don't so I'm trying to but but I'm sorry can you articulate the question for the panel do you have a specific I have an interpretation of the question but he can not or take his head which is so one thing we've been discussing is whether these rules should be applied evenly across existing old technologies and the new cryptocurrencies I think the question is about whether the anti-money laundering and anti-terrorism rules themselves are onerous and inappropriately costly for everyone old technology or new technology okay anyone want to take a cut at that one or I'm more than happy to jump in because I spent a lot of time in this area I often say I don't really care whether you're subject to the FinCEN regulations you know keep in mind what I mentioned earlier about the federal criminal statute that you're really not supposed to be involved in illegal activity or moving the funds was associated the value associated with that illegal activity that really should be sort of the guiding principle here and if you if you take that into mind one of the reasons we've had the build out of the rules that we have is because quite honestly and this may be sacrilegious to say this but people haven't taken that responsibility seriously even our biggest financial institutions and so we've had to be much more proscriptive in what it is we require people to undertake and do interesting case that came out indictment two weeks ago right before the New York hearings involved a young man 24 years old who his company went ahead and registered a bitcoin company registered as an MSB and was subject to had its full AML compliance program place but at the end of the day he has been indicted for allegedly being involved in working with someone who had clear criminal intent or allegedly clear criminal intent related to the system so you can have all the rules in the place that you want to it's still not going to necessarily change it may change behavior it may cause people to look for those activities more so but it's not going to necessarily be the game changer for behavior well one point I would make all the bitcoin community might make is exactly with regard to how the rules are enforced on on on today's dominant players which are very large international financial institutions you know were when the rules when the rules have been broken in a flagrant repeated manner as by HSBC or Standard Charter for example do you really think the penalties that were exacted on those institutions are going to change that behavior going forward I'm skeptical and I think there should be more more discussion more political discussion around that from people who want to at least have the system operate in a fair way across different kinds of businesses I do think I'm going to borrow some language that Jeremy Lair who is an entrepreneur and testified at our committee's hearing a few months ago said you know it's one thing if me and a few buddies want to build photo sharing app in my garage to not maybe have a lot of government regulation over that but if I want to build a financial institution then I probably should be able to have a reputation that I can raise the capital or that I can hire the lawyers or that I can do all of the things that financial institutions need to do to play in that space and I think I think that's really kind of what we're talking about so maybe we had the gentleman right here hi Joe Collangelo consumers research first of all for Carol and John for not being academics or economists amazing how much you know about bitcoin is really impressive you know to be applauded so it gives me confidence that the people regulating it know so much John you taught or Simon you talked about they're not being a sense of urgency what's the Russian regulating well you know maybe with a seven billion dollar monetary base there isn't much of a rush but say bitcoin goes to ten thousand dollars by March we've got you know a hundred billion dollar monetary base then there is a rush right are we going to wipe out fifty billion dollars from consumers wallets or are we going to you know encourage the growth right what are we going to do then so I know you're wanting to prognosticate but if you had to say bitcoin goes to ten thousand dollars in March what's the United States' response well I would say even if it doesn't go to ten thousand dollars what a lot of people don't realize is there at least fifty or more I last time I looked I think it was forty two but that's probably about two months ago cryptocurrencies out there and there are new ones that are being developed every day so you've got other types of currencies and there are these other commodity back currencies that are coming out too so there's a lot of development that's happening what is it we're really talking about and I think this is you know I heard the earlier discussion about the underlying numbers but in a lot of ways we're talking about frictionless payments that what we're really looking for is a way that you can reduce the cost and as much of the friction that exists around our payment system right now and again there's a lot of energy in it right and a lot of drive and again the bitcoin community is unlike anything I've ever seen before in pushing forward pushing it's it's a if there's even an agenda but pushing forward with the development so I think that there is a certain degree of urgency and putting aside all of the economic I'm going to be here to see here or economic rationale or discussions on it that's just this is a tech build out we've got going on yeah I agree with that part of what Carol said and I agree with the very important point about the competition between alternative cryptocurrencies that that that ecosystem is healthy and I think sensible I don't I don't quite get the question if it goes to 10,000 if it goes to okay I won't say a number I might be quoted on that higher in 10,000 it's an asset that people buy and if if the value of rare paintings or other artifacts that people buy goes up goes down I don't think that should change the trajectory of regulatory policy you should be have a sensible policy irrespective it's not money right now it's not legal tender it is something that some people accept for transactions and other people don't Carol was actually saying to me earlier how difficult it is for I mean that was the the premise of of what you were saying earlier how difficult it is for businesses in the Bitcoin space to generate cash revenue in dollars that they can then put into the political process so this is this is not money this is an important interesting technological development I think it's leading in a in a healthy direction don't make the mistake would be my suggestion on either side both the industry and the regulatory side of being rushed in into doing things that will lead to scandals and misbehavior and damage the the reputation of the broader industry that everyone in the industry should want that reputation to develop in a healthy way yeah and I do think you know government I think law enforcement specifically is not really focused on the technology as much as the uses of the technology right using it to money launder using it for other illicit activities I do think if the market cap was to grow to that extent you know right now it's difficult to to send really large transactions of Bitcoin or to to do money laundering theoretically if the market cap got bigger it's theoretically I think law enforcement I think would be more concerned about that possibility still I think there's a lot of ways to launder money that are a lot easier than than Bitcoin that organized criminals and others do throughout the world every day but I do think it would probably be on law enforcement's radar more which I do think is is another reason kind of to go off with with Carol why I think my boss and others have been trying to push a dialogue among federal agencies and officials and states is to sort of you know build that sort of infrastructure build that regulatory framework early so that we do sort of have a little more confidence in in the build out if it is to build out going forward one other comment if it does go to 10,000 the higher the price of Bitcoin goes the less likely it is to become the medium of exchange and you will see others sitting on top of Bitcoin or otherwise like whether it's like coin or P2P coin and so on that that would potentially become the medium of exchange okay so well there's lots more that could be said but we're running about off time here so let's thank our panelists for a really interesting discussion thank you very much