http://www.cbsnews.com/8301-504943_162-20069780-10391715.html?tag=stripAt about seven minutes into this interview, Jeff Garzik makes the following statement:
Were working with the government to register bitcoin exchanges as MSBs (Money Service Businesses) to make sure that the long arm of the government can indeed reach bitcoin. A lot of bitcoiners are diehard Ron Paul libertarians, who might not necessarily agree with me but the only way bitcoins are going to be successful is working with regulation and with the government. And thats what weve been doing specifically with the bitcoin exchanges, thats where you exchange your US dollars or Euros to Bitcoins and back again, is that all of these are fully regulated with the government, fully complying with all the anti-money laundering and know-your-client laws.
Earlier in the interview he dismisses organizations like Silk Road as being pretty bleeping dumb.
One of the things that attracted me to Bitcoin in the first place was its potential for circumventing all of these oppressive and totalitarian laws. It was a real pleasure registering with Mt Gox as compared to opening a new brokerage account. As is usually the case, when a new industry takes hold and is threatened by government, they partner with government in a well-known phenomenon known as regulatory capture [think pharmaceuticals]. They raise costs and conspire to legislate advantages for themselves to keep out upstart competitors. So it seems likely to me that regulation of the bitcoin exchanges will take place. While Im disappointed that one of the most prominent bitcoiners has this pro-regulation attitude, there are still a number of other advantages to bitcoin, even if the exchanges become regulated. I have two questions:
1) Will cooperating with government make bitcoins go up in value because it may result in their adoption by the mainstream, or will it make bitcoins less valuable because it diminishes financial privacy which is a very important motivation for a lot of people.
2) Assuming that companies like Mt Gox become registered MSBs, what are the prospects for outlaw exchanges and a successful black market in bitcoins where you dont have to present your papers in order to transact business?