Bitcoin experts, lawmakers battle over perceived regulatory gray area

The Bitcoin Foundation, the top trade group for the digital currency market, on Tuesday spoke before the House Financial Services Committee as part of a landmark hearing called “Public and Private Use of Cryptocurrencies.” This marked the first hearing of its kind; the panel is expected to look into the legal and regulatory framework for digital currencies.

Many believe the issue is critical for the entire blockchain market. The committee’s chairman, Republican Patrick McHenry of North Carolina, said in his opening remarks that “the way Bitcoin and other cryptocurrencies are regulated must change if the market is to grow.” Democratic Representative Zoe Lofgren of California echoed these sentiments, saying that the market for digital currency “was part of a new age in finance, where accountability in both systemically relevant and privately owned businesses will emerge.”

During the hearing, members of the Bitcoin Foundation called on Congress to tackle the regulatory gray area in Bitcoin regulation, saying that lawmakers should not force the industry to choose between consumer protections and the potential of lucrative investments. Bitcoin proponents claim that a consumer-driven, “government-free market” is possible. Others believe that the current decentralized, online digital currency market is a critical element in helping regulators better understand cybercrime and effectively regulate digital currency platforms.

Lofgren also spoke out against the Security and Exchange Commission’s recent decision to block the proposed merger of Facebook and Twitter. “It is disturbing that the commission’s action highlights a growing trend across industries, a growing disregard for competition at the expense of smaller enterprises,” she said.

However, the introduction of “the CIA’s Most Intriguing Scientist,” a four-minute video embedded within the hearing, left many on social media wondering whether the House could go a bit too far in the already-sensationalized arena of bitcoin. The video, which includes a voiceover using the same real-time voice that synthesizes voices used in voice recognition, began being promoted online in early August and featured Steve Omel, a physicist at a Richmond, Virginia, company called Ciphernet. Omel signed his name to the four-minute rant, spouting all manner of pro-cryptocurrency sentiments.

In the video, Omel describes Bitcoin as a worldwide experiment that is completely governmentless and a safe haven for cybercriminals “who want to disappear into the ether.” He promises in his faux-scientific ranting that Bitcoin will help “save us from all the madness that’s out there.”

Watch the video below. WARNING: It is graphic.

Organizers of the hearing tried to distance themselves from Omel’s video, saying that he was not personally hired to speak at the hearing.

Read the full story at The New York Times.

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