A Senate Report Supporting Bitcoin and Virtual Currencies

The report submitted by two senators on the Finance Committee argues that “public authorities cannot ignore the development of virtual currencies.”

A month after the Tracfin report was published, two senators submitted their work on issues related to the development of bitcoin and other virtual currencies. Two lawmakers, members of the Senate Finance Committee, offered rather favorable views on the development of virtual currencies.

The two rapporteurs, Committee Chair Philippe Marini (UMP) and General Rapporteur François Marc (PS), estimated as follows:

“The development of virtual currencies, especially bitcoin, is a long-term phenomenon that raises important economic and legal issues that cannot be ignored by public authorities. And, despite clearly identified risks related to volatility, anonymity and lack of legal guarantees. »

In addition to almost zero transaction costs, Philippe Marini and François Marc stress that “Bitcoin offers very high transaction security: these are encrypted and verified in a decentralized manner by a large number of computers, without going through a “central” system, which is by definition more fragile “.

However, the pair lamented Bitcoin’s volatility and the fact that “Bitcoin cannot benefit from any guarantees that public authorities can convert it into ‘real’ money. If there is a general loss of user confidence in the system, this will leave users overwhelmed. Well done.”

Aside from anonymity, “a boon for cybercrime,” they warned “storage,” relying on the bankruptcy of Mt. Gox, the online trading platform “has ruined nearly 127,000 users on Feb. 28.” But, they’re moderate and best at this stage Beware of any alarmism. »

Read our article: In France, the plight of a former ‘Bitcoin tycoon’
The two senators concluded that the state has a role to play in regulation:

“Therefore, public authorities must strive to establish a balanced legal framework that prevents excesses without compromising innovation capacity. In this regard, resorting to the common law legal category currently seems to be the most reasonable solution, be it qualified virtual currencies or Services related to it.»

Regulatory issues have been addressed in the Tracfin report. Published in early June, it not only reports on the risks associated with the use of these cryptocurrencies, most notably the well-known Bitcoin that concentrates 90% of the market, but it also provides the first avenue for regulating their use and Make their circulation more transparent.

Bitcoin was created by an anonymous developer in 2009 and is issued by software according to an algorithm. According to the principle of organized “scarcity”, the number of bitcoins created is limited to 21 million, which makes it a highly speculative currency. Its price fluctuates according to supply and demand and is very volatile.

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