MasterCard, the US multi-national financial services corporation has recently come out against Bitcoin. The company demands regulators to create a so-called “level playing field” within the payments industry. The statement came ahead of the ongoing inquiry over digital currency’s legal treatment. The inquiry was submitted by CoinJar, a Bitcoin payments systems provider to the Senate Standing Committee on Economics (Australia).
Standardized Treatment
MasterCard argues that all financial services should be regulated to ensure standardized provision of services to guarantee overall safety and simplicity for merchants and consumers.
A few days after MasterCard’s outcry against Bitcoin, Matthew Driver, President of MasterCard South East Asia, criticized digital currencies like Bitcoin. According to Matthew Driver, Bitcoin is associated with too many risks to actually succeed as an alternative payment solution and currency.
General Concerns
Aside from demanding a level playing field, MasterCard raised their concerns for Bitcoin’s inability to provide the values necessary to provide a quality financial service, the same values MasterCard leveraged to establish the fundamental foundation for its enterprise. According to them, consumer protection, counter-terrorism financing and anti-money laundering policies should comprise the regulation affecting electronic payments.
Associated Risks
MasterCard in their crusade against the infant industry of digital currency demanded the application of similar standards associated with payment services. The consumer and commercial trust that currently exists is a result of decades of dedication and hard work to provide a safe, stable and reliable service, isolated from fluctuations and volatility, while maintaining a while degree of transparency.
Since Bitcoin lacks the basic mechanism to provide sufficient degree of security, something which MasterCard claims to provide, Bitcoin users are exposed a great and unnecessary amount of risk. MasterCard further added that, the recent adoption of regulation within Australia should also address the problem of anonymity in their attempt to curb overall illegal activities, especially illegal activities associated with Bitcoin.
MasterCard went on to criticize the massive volatility experienced in the digital currency’s exchange markets, linking it to significant losses experienced by many adopters. The volatility has reduced the intended utility of the currency and should be considered redundant in terms of reliable payment system.
Bitcoin Community Responds
Ron Tucker, the chairman of Australian Digital Currency Association, said that he was delighted about the submissions to the inquiry. He was of the opinion, that Bitcoin is a new technology and still very much it’s in infancy stage and therefore, requires different and innovative form of government supervision. To exercise a pre-existing regulatory structure, which has developed over the years to accommodate a particular type of service would be unfair and disadvantageous. Bitcoin should be subject to government regulation however, policies should be made based on the new technology allowing the new regulations to accurately evolve in light of current observations made over the new technology.
Economics References Committee
Economics References Committee was mandated by the Senate to examine the new policies by Australian Tax Office and the overall impact of digital currencies.
A total of thirty one organization and individuals have made submissions to the inquiry, including CoinJar, Bitcoin Foundation, Australian Digital Currency Commerce, Australian Taxation Office, Reserve Bank of Australia and of course the payment giant, MasterCard.
The findings of the committee would be published in March 2015.
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