European Treasurers Share Concerns over Bitcoin
Here are some facts about Bitcoin that were presented at the ACTSR General Assembly:
Treasurers’ Concerns
Issues raised by European treasurers centred on understanding and comparing Bitcoin to current forms of payment, the payment systems and various currencies. Below is a synopsis of their concerns:
The purchase and transfer is completely anonymous. Some treasurers had an issue with Bitcoin as it pertained to Office of Foreign Assets Control (OFAC) laws, trade embargos, regulatory reporting, and the heightened issues around not knowing who your customer is—especially depending on the product being sold in exchange for Bitcoin. It should be noted that Overstock.com, one of the largest online retailers, was the first mainstream retailer to accept Bitcoin through a Bitcoin wallet for settlement.
Bitcoin may not be good for the unbanked. Ultimately you need to settle Bitcoin into currency. Putting the unbanked in a sophisticated arrangement that deals with encryption that can be lost if the Bitcoin code is lost isn’t really a solution that treasurers agreed with. For example, treasurers in the United States struggle with getting unbanked employees on payroll cards, so how would they get their unbanked employees on Bitcoin with payroll issues and the added complexity and storage?
Bitcoin retail payments via mobile could face limited acceptance. The currency offers peer-to-peer settlement over desktops, mobile phones and tables, so anywhere there is electricity, Internet access and a computer, you can transfer Bitcoin. You can even use an app in Android to help with the balance tracking. Apple, meanwhile, doesn’t allow any Bitcoin apps in its app store, and there is an assumption the company will roll out its own payments platform—as was discussed at the Assembly. If Apple, one of the world’s largest mobile phone manufacturers, doesn’t allow Bitcoin apps, that might be a good indication that Bitcoin is not a proven payment form just yet.
Bitcoin has several legacy issues, headline risk and a reputation for abetting illegal activities. The perception by the majority of treasurers is that it is not a trustworthy currency. The Mt. Gox exchange was addressed as well as the Silk Road event. Plus, the Internal Revenue Service ruling that Bitcoin is property makes it more difficult from an accounting perspective. For many, the past issues of Bitcoin supporting a haven of illegal activity is enough to pass on it.
Bitcoin’s Future
Bitcoin is still only five years old. Many treasurers agreed that the innovativeness of the digital currency was the intriguing aspect, and they allowed that there might be potential in the future in certain areas where payment systems are in their infancy or less regulated. Figuring out how this is applicable in their course of business is where treasurers struggled most.
The representative from the Bitcoin Foundation stated, in 4-5 years, Bitcoin will really start taking off and become a more mainstream currency that could eventually surpass PayPal. The Bitcoin Foundation stated that $289m in Bitcoin was processed last year, surpassing Western Union’s US$216m in payments. Bitcoin is in the process of securing an ISO trading code to identify the currency much like foreign currencies have a three-digit code.
Perhaps Bitcoin will become more mainstream, but only time will tell, and there are still issues to resolve. Until there is more clarity and Bitcoin becomes more mainstream, many treasurers are taking a wait-and-see approach.