• PayPal competitors include Visa and MasterCard - and now bitcoin, which has become a major player in the payments sector. 

  • Bitcoin has achieved this despite low overall adoption, estimated at no more than 9% of the global population. 

  • The extremely large volume of payments using bitcoin ($3.4 trillion in 2018) means regulators are under more pressure than ever to step in and monitor the crypto market. Sign up to trade 100% insured crypto

By: Marko M. Hafez, President

People sometimes give us funny looks when we tell them that at Blockstation, part of our mission is to help bring cryptocurrencies like bitcoin and Ethereum on the regulated stock exchange. They talk about the free market, the democratization of currency, removing red tape… you name it.

Those same people probably don’t think twice about how safe it is to hop into a car or take an airplane (give or take a Boeing 737 Max).

The connection between digital currencies, cars, and airplanes is the fact that regulation always follows innovation:

And that’s for the best. All regulation means is protection, pure and simple, whether it’s the rules of the road, making sure airplanes don’t crash, or keeping financial markets safe for everyone. It happens to every industry. Bitcoin regulation just got there faster than we’re used to.

So when a new financial tool like bitcoin starts giving payment industry giants like Visa and MasterCard a run for their money, it’s probably time to take a look at regulation.

Bitcoin is bigger - and smaller - than you think

Global adoption of bitcoin is somewhere between 2% and 9%, pretty far below the level needed to take a new innovation mainstream:

Those wondering how to pay with bitcoin just aren't far enough along the tech adoption curve

But that’s not the total picture. That small number of users is having a major impact on world markets, especially as a payments and money transfer system. 

In 2018, bitcoin’s transaction volume for payments was $3.4 trillion. That’s five times more than PayPal’s, more than half of MasterCard’s, and over one-quarter of Visa’s. The average transaction volume is even more telling at $45,615 through bitcoin - way more than second-place Visa at just $90.

In terms of who is transferring the bitcoin:

  • Person-to-person payments average $100

  • Person-to-business payments average $14

  • Business-to-business payments average $50,000

A lot of people are figuring out how to pay using bitcoin, especially between businesses. Odds are high that at least some of that money is being used for illegal or illicit purposes, creating real risk for millions of investors everywhere.

Regulations happen when things go wrong

Do we really need to go down the list of disasters that have hit crypto investors? Between hacks, exchanges disappearing overnight, and improper activities like insider trading, investors have been hit hard in 10 short years.

Ideology about a free market for everyone is great, but it only works when everyone stops asking “is bitcoin safe” and just starts using it. And the crypto world has already taken steps towards self-regulation to make that happen, including:

  • exchanges providing insurance for investors whose accounts get hacked

  • the formation of the Virtual Commodities Association

  • growth in KYC-verified accounts and exchanges obtaining their FinCEN money service business designation, or similar

Which is great news. But I have to ask, why re-invent the wheel?

Bitcoin is a financial instrument

And we already have regulators that oversee those. Overall they’re good at what they do, and it’s taken them over 140 years of trial and error to get there. It just makes more sense to work with the regulators that already exist and understand what’s required to protect investors. 

Jamaica is a prime example, with regulators, the national stock exchange, depository, and licensed brokers all collaborating with Blockstation to leverage their strengths and expertise, bringing safe and regulated bitcoin and Ethereum to the stock exchange. New York State’s Bitlicense is another great example of regulators engaging with cryptos.

The simple fact is that regulations are coming, with traditional regulators looking to lead the way. Blockstation is committed to working with them to help drive adoption of cryptos by making them safer for everyone to use.

Regulators: Do you want your Risk, Legal and Compliance teams to be well-equipped for the digital future?

Join a Blockstation Digital Asset Regulation workshop! Complete and submit the form below and we will demonstrate the processes, procedures and real-life tools that will enable your organization to:

  • better protect investors

  • maintain a fair marketplace

  • ensure transparency, and

  • mitigate systemic risk for you organization and industry partners

Sign up for a free Blockstation Digital Asset Regulation workshop!