No more banking regulations for bitcoin?

Tuesday, April 4 the Senate Commerce committee will host a public hearing on a bill to exempt bitcoin transmitters from regulation by the Banking Department. 

Bitcoin is a virtual currency.  It’s a little bit like a stock insofar as the value of bitcoin varies in dollars, and you can purchase or sell bitcoin online.  Some retailers also accept bitcoin as payment. 

While an individual does not need a third party to use bitcoin, there are companies that help a user securely store bitcoin and facilitate bitcoin transactions.

Under current law, the Banking Department regulates those bitcoin companies as money transmitters, just like Western Union and other financial services companies.  This includes a state licensing process and a $100,000 bond. 

HB 436, the bill with a hearing April 4, would end the license and bond requirement for bitcoin businesses. 

Bill supporters argue that HB 436 will increase bitcoin business and make New Hampshire a more welcoming environment for technological innovation.  Supporters also note that bitcoin companies would still be subject to consumer protection laws, which generally prevent fraud in transactions.

Bill opponents argue that the people most likely to use bitcoin businesses are less familiar with bitcoin technology, which makes them more vulnerable to fraud.  The state has a duty to protect these people’s money, just as the state protects U.S. dollars in a bank.

Do you think the state should regulate bitcoin businesses as money transmitters, or do you support an exception?  Share your opinion in the comments below.