Brokerdealer.com blog update courtesy of reporting from WSJ and other news outlets
Arthur Levitt, the longest-serving chairman of the Securities and Exchange Commission, is joining the advisory boards of two bitcoin-focused companies.
Frmer SEC Head Arthur Levitt, photo by Reuters
As an adviser to Atlanta-based BitPay, a bitcoin payment processor, and Vaurum, a Palo Alto-based bitcoin exchange for institutional investors, Mr. Levitt says he hopes to “help them understand the imperative of a robust approach to regulation” if bitcoin is to fulfill its promise to further shake up the world of finance. The appointments will be formally announced Tuesday.
Bitcoin is an independent digital currency in which transactions are verified by a network of computer owners and a universal payments ledger. The model strips out banks, credit card companies and other intermediary institutions from electronic payments and so aims to reduce costs in the system.
Mr. Levitt, who ran the SEC between 1993 and 2001 and who these days works in a variety of consulting roles, is one of the highest-profile members of the U.S. financial establishment to work in the digital-currency industry. In an interview, he said he was drawn to the sector by the innovative energy of the young people behind it, a group that he described as always “thinking beyond the box.”
“The intellectual firepower behind [bitcoin] enterprises is astonishing,” Mr. Levitt said. “But I think in terms of compliance and regulations, they are relatively immature.”
He said bitcoin needs regulation to build the trust of the broader population and boost adoption. Bitcoin firms “must have as their top priority a greater public understanding of what bitcoin is, how it works” and of the improvement it brings by “imposing competitiveness on establishment practices and procedures,” he added.
The BitPay and Vaurum appointments come at a crucial time for bitcoin. After it rallied 9100% against the dollar in the 12 months to December 2013, its price has since fallen by 70% from that peak, in part because of regulatory uncertainty.