MasterCard Urges Regulation of Bitcoin
June 15, 2015
Last fall, the U.K. Treasury issued a call for information on digital currencies. A letter from MasterCard in response said the risks outweigh the benefits and urged British regulators to take strong measures when enacting rules to regulate the emerging online payment method. The letter , obtained and made public by Bitcoin publication Coindesk, refers to, but does not detail, the “perceived benefits” of digital currencies and manages to refute most of those benefits as soon as it raises them.
“Low transaction costs and faster processing are mentioned as providing particular advantages, as is the safety of the system,” the Purchase, N.Y.-based card network began. “However, we would argue that, when compared to MasterCard’s network, the claims pertaining to the speed and safety of digital currencies does not hold up, not least given that on average it takes 10 minutes for a block to be verified and that digital currencies are far more susceptible to hacking attacks. Additionally, while digital currency transaction costs are currently lower, this is because providers of digital currency services do not currently bear any compliance costs, whereas providers of other forms of electronic payment bear the cost of complying with consumer protection laws and anti-money laundering laws.”
The company recommended that digital currency transactions be subject to some regulatory body, that bitcoin and other digital or cryptocurrency companies be subject to the same AML and KYC requirements pertaining to other non-bank money transmitters and that consumer protections including the ability to charge back purchases be instituted.