Simon Lelieveldt, a regulatory consultant in payments and banking, contributed to the April 2014 Bitcoin meetup in Amsterdam with a presentation on the relevant legal underpinnings of any payment system (Frijda, 1914). He showed how even playing cards have become payment instruments in the past. Simon compared the bitcoin emergence to e-money discussions of the 1990s and stressed the relevance of good governance to wrap up with the statement that the idea(l) of no regulation for bitcoin would be a useless myth.

1. Cryptocurrencies
Playing the cards right
Simon Lelieveldt
@finhstamsterdam

2. • Postbank – ING
• Dutch central bank / supervisor (DNB)
• SL Consultancy
• Dutch Bankers Association (NVB)
• Independent Regulatory Consultant
• Retail Payments
• Supervision of e-money: Chipper/Chipknip
• Development of e-money & Payment Services Directives
• Financial supervision and compliance
• Financial History (of Amsterdam)

4. The Amsterdam Exchange Bank (1609)

5. Money in Quebec (1685)
• Redeemed: 1717, Paris

6. US Coinage Act of 1873

7. Theory of money (1914)
• Discussion on the nature of bank notes
• State-proclaimed is the essence ?
• Convertability into valuable commodity ?
• Acceptance with the public ?

8. Theory of money (1914)
• Discussion on the nature of bank notes
• State-proclaimed is the essence ?
• Convertability into valuable commodity ?
• Acceptance with the public ?

9. Some lessons learnt, over time
1. Any type of token will work: acceptance by the public is key
2. State and legal systems should not be flawed (property-justice)
3. Value of coins/money in circulation must match their economic use
4. Private sector organisations can also instill trust and stability
5. Anonymous (value) exchange systems will always take off quickly

10. This time it’s different ?
E- money
• Regulators jump to impose
supervision
• Some sectors avoided the
supervisory regime
• Private schemes with broad and
solid governance rules
• Anonymous systems subject to
investigation / liquidation
• No value effect due to 1:1
conversion with fiat currency
Crypto-currencies
• Some regulators regulate as far as
financial service is the result
• Companies seek to be included in
the supervisory regime
• Insufficient governance built into
crowd-based design
• Silk Road / Increasing trend to
identify customers
• Monetary side effects due to
design choices on circulation size

11. Three main topics
Regulation
• FINCEN
• ECB
• Many central banks
• NYC State regulator
MSB
• Germany
Compliance
• Western Union
• Dwolla
• Rabobank
• Swedbank
• Apple
• USAA Bank
• Wolfsberg group
Cryptocurrency
Market
Governance

12. The landscape

13. Regulation - compliance
• Now: the money transmitter route (betaaldienstverlener)
• Combined with future legislation: access to bank accounts
• Future question: digital contracts, tradeability – markets
• Money transmitters vs regulated markets (exchange) regulation?

14. Playing the cards right ….
• A weak governance model is also some form of governance
• The ‘no regulation’ idea is a useless myth
• Steering clear from regulation might leave one empty-handed