Ms Wivell Plater said whether or not the Bitcoin business needs a licence would depend on the nature of the Bitcoin service being provided, and “depending on the size of the transactions”, businesses that provide a facility where someone uses Bitcoin as a non-cash payment will likely need an AFSL.
“There are a variety of scenarios in which Bitcoin businesses would require an AFSL,” she said and they exist “regardless of whether self-regulation is acceptable to the legislators”.
In the case of derivatives, Ms Wivell Plater said businesses that use Bitcoins, provide advice on them or arrange for their clients to buy or sell them will also “need an AFS licence”.
“[This is] why the question about whether or not Bitcoin should be regulated as a financial product centres around [the] actual use and the intention of its users, rather than the underlying Bitcoin itself,” Ms Wivell Plater said.
The regulation of Bitcoin is also needed since the digital currency can be stolen, and leaving it unregulated is inconsistent with the approach to consumer protection taken in “other areas”, she said.
“Bitcoin transactions are not reversible, there are no defined terms of trade and there is price uncertainty (based on current predictions on valuation),” Ms Wivell Plater said.
“It’s potentially dangerous and if it’s not regulated, consumers could well pay the price,” she said.
