"I think a regulatory solution would do more to increase ordinary consumer confidence in Bitcoin and its institutions than one that is purely market driven or industry led. I am well aware of all the challenges that regulatory solutions have, but if Bitcoin is to become a mass market product, then it will require a measures to lift confidence from those who will not understand a technology solution that their BTC is safe. I advocated against new BTC specific regulation at Lawsky’s hearings last month, but I now think that some sort of regulation covering customer funds security may make sense if there is going to be a BitLicence.”
That's right, we just need to hold hands, close our eyes, and believe, and the regulators will come save us. The regulators who ignored repeated warnings about Bernie Madoff for years. The regulators who were too busy watching porn to do their purported jobs. The same ones who turned a blind eye to Wachovia laundering drug money for the cartels, the responded with slaps on the wrist (or was it pats on the back?)
In order to believe that regulation will keep you safe you've got to believe that people with no accountability, and no personal stake in protecting your Bitcoins, are suddenly start doing the job they've been consistently failing to do for years.
Anyone who believes that is a liar or fool.
We know that regulation isn't about protecting customers because despite ever-increasing regulation customers are not protected. So what is regulation about? Regulation is about power.
It's about a small self-appointed financial aristocracy who believes they should be the exclusive gatekeepers of the industry. It's about making sure the paper belt embeds their tentacles deeply inside a new industry. It's about gaining the capacity to enforce rules in order to profit from the ability to grant exceptions.
At no point is it about protecting you from anything.
The existence and growth of Bitcoin repudiates the effectiveness of regulation. People adopt Bitcoin because it's a currency whose operation is governed by cryptography instead of regulators. Every new wallet opened is a vote of no confidence in regulation.
Should exchanges have better accounting and ways to limit their own ability to defraud their customers? Absolutely, but we don't need regulation for that. As it is with the case with Bitcoin itself - the answers will be found in intelligent software and cryptography.
Vires in Numeris