Europe is better positioned as a place to create Bitcoin-based startups than the US. That was the message coming out of Bitcoin London today, the first major conference in London to address startups, investors and business models of the online currency. Covering the broad sweep of businesses, technologists and institutions involved in the Bitcoin space, the conference heard that the US may have made a fatal strategic mistake in classifying Bitcoin as if it were money so early on in its development.
What has emerged is that Bitcoin is being treated in many different ways: as money, as an asset class, as the first highly secure P2P global information exchange, as a technology platform and even as a if it were a startup entity in its own right.
Constance Choi, General Counsel with Payward sounded exasperated on stage at the conference: “Having to explain Bitcoin at Federal and State level is a nightmare.” She said the Treasury response was that the 50 State system is just “a fact of life”, a “a barrier to entry” and it up to the Bitcoin sector to survive.
“There is incredible potential for Bitcoin if not as a unit of exchange but as a secure global network for information exchange,” she said.
But despite this potential to be many other things, she said FinCEN (the Financial Crimes Enforcement Network) has basically said “Bitcoin is not money, but it is in the ‘money bucket’.”
“You see competing voices for jurisdiction [at government agency level]. You can call it money or a payment instrument. There are lots of different labels on Bitcoin.”
She said that although regulators in the US don’t think Bitcoin is money “it acts like money so it’s being treated and regulated in this way.”
In the UK the Financial Services Authority doesn’t consider Bitcoin to be ‘fiat’ money or eMoney.
And at a wider European level, the European central bank has taken the view that Bitcoin is not money and doesn’t require regulation yet. That turns out to be a huge advantage for Europe.
“There’s been a more reasoned approach in the EU… Because these are no regulatory regimes there is a lot of room to work out which rules might fit in and what rules should apply.”
Choi said the US is “5 years behind the EU” in payment innovation.
Her comments were backed up at the conference by Bitcoin Foundation’s General Council Patrick Murck, who said competition between US government agencies to regulate Bitcoin was creating barriers for the ecosystem to thrive.
Certainly there appears to be early signs that Bitcoin startups may desert the US for less regulated climes.
Speaking to TechCrunch at the Bitcoin London Conference, Jonathan Rouch, founder of Bits of Gold in Israel, said he has no plans to launch his service for creating Bitcoin liquidity in the US because of the potential for regulatory intervention.