imagine the first congressional hearings on Bitcoin being a prelude to a federal crackdown on the decentralized financial network.
But that's not what happened. Instead, the hearings were lovefests. All three Obama administration officials who testified this week stressed that Bitcoin has legitimate uses and argued that no new regulations were needed to police illicit uses of the network. Most of the other witnesses echoed those sentiments.
That wasn't a coincidence. The cordial atmosphere of this week's hearings was the culmination of months of careful diplomacy by Bitcoin advocates. Since the spring, leaders of the Bitcoin community and sympathetic policy advocates have been engaging with federal regulators, lawmakers and other influential figures inside the beltway. The result: a near-unanimous consensus that the federal government needs to be careful to avoid hampering the growth of the world's first completely decentralized payment network.
A tough crowd
On the morning of June 13, several dozen well-dressed Washingtonians filed into the Carlucci Auditorium at the stately headquarters of the United States Institute of Peace. For many of the government officials in the room, this would be their first opportunity to meet senior figures in the Bitcoin community in the flesh. Panelists included lead Bitcoin developer Gavin Andressen and Patrick Murck, general counsel of the Bitcoin Foundation.
The way the event was framed didn't augur well for Bitcoin. One of the conference's two sponsors (along with Thompson Reuters) was the International Centre for Missing and Exploited Children. A major theme of the second panel was the use of bitcoins to purchase child pornography.
"Child pornography is like Bitcoin in some ways," said Andrew Oosterbaan, who prosecutes child pornography cases for the Justice Department. "It has intrinsic value to people who want it. The more valuable child pornography is the new child pornography. When you add an anonymous currency, you've taken individuals who are already incentivized to produce, given them a far more meaningful incentive to do so."
"Bitcoin is nothing like child pornography," a visibly angry Murck shot back. "If there was one instance of a child being abused because of Bitcoin, that's one too many. I'm a father, I think there's a special place in hell for people who do that."
But Murck also stressed that the Bitcoin community was willing to work with federal regulators to ensure that Bitcoin-based businesses complied with applicable laws. "I want to craft a sane regulatory environment," he said, urging federal regulators to "engage stakeholders. Don't have secret meetings. Have public meetings. We're all happy to live with the consequences of whatever rulemaking is open and transparent.”
Murck would get his wish for engagement, though many of the meetings would be held behind closed
doors. "We always intended that conference to be a launching point," says Ernie Allen, the president
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