Look out MtGox, Bitcoin-Central just beat you to one hell of a punch. While this may not mean a lot to my American readers, those of you across the pond in various parts of Europe will be excited to hear that popular European Bitcoin exchange Bitcoin-Central just became the first such exchange to be licensed as a Payment Service Provider (PSP).
There is a lot of controversy over whether regulation is good or bad, but for the time at least no one can deny that Bitcoin still has to interact with the traditional banking system – we can’t pay our power bills in Bitcoin just yet, after all. To this end, having even a single regulated body participating in this traditional banking system lends the entire Bitcoin community credibility.
The next steps are large indeed and there is much work to be done, but obtaining regulatory licensing – even through a partnership deal – is definitely the hard part. Now that this is out of the way, the real work can begin. Bitcoin-Central parent company Paymium is hard at work on a number of ideas that showcase just what a licensed bank can do and there’s one project in particular that I’m pretty excited about: a Bitcoin debit card.
If this sounds familiar, it’s because BitInstant recently stated their intent to do basically the same thing, but Paymium seems confident that with their new regulatory status they’ll have an easier time converting automatically between BTC and EUR, allowing customers to carry a balance in both currencies and fund purchases automatically and transparently from a balance held in bitcoins.
There are other bonuses to regulation as well: Balances
held in either currency in euros should be protected by the Fonds de Garantie des Dépôts (the French equivalent to the American FDIC) up to €100,000. Additionally, this should (hopefully) put an end to the bank account troubles many European exchanges have experienced – in the past many a bank account has been closed arbitrarily, making it difficult for many Bitcoin exchanges and services to perform SEPA transfers or otherwise transact between bitcoins and euros. Now that a Bitcoin company effectively is the bank, these problems would appear to be at an end.
Still, more than ever users of Paymium and Bitcoin-Central will have to jump through legal hoops (AML laws et al) to keep things kosher. This isn’t really a change from the way things currently are, exchanges have always been legally required to comply with AML laws and such, but the regulatory eyes are likely more focused on Bitcoin than ever. Whether you think regulation is good or bad, in today’s world with today’s banks it’s required and I for one am glad to see someone finally legitimizing my favorite cryptocurrency.
Update: So the wording of the original post was… let’s just say a bit misleading. I’ve been informed by knowledgeable sources that in France (and the Eurozone in general) “PSP” does not equal “Bank” so Bitcoin Central is not equivalent to a bank. Furthermore, they aren’t even licensed as a PSP themselves but rather are teaming up with one to offer better services. It’s still a good step forward but nowhere near the leap the forum post made it out to be.