Regulation is stunting the growth of digital currency businesses that pose a long-term competitive threat to banks.The latest to get caught in the regulatory thickets is TradeHill, a Bitcoinexchange that has suspended trading until it can get licensed as a money transmitter. Its reasons for retreating echo the concerns of Facebook Inc., which has been pursuing money transmitter’s licenses to legitimize the social network’s Facebook Credits.
That TradeHill, which shut down its service and returned its clients' funds on Feb. 13, and others like it would run into regulatory challenges was almost a given. Bitcoin, a digital currency with no central issuing authority, is touted by its users and admirers as being outside the control of any government.
Read it at American Banker | Bank Technology NewsBitcoin Exchange's Crisis Bodes Ill for Payment Innovation
Who couldn't see this coming?