Cameron Winklevoss: A 'Sheriff' for Bitcoin's Wild West Is a Good Thing As the first day of Bitcoin hearings organized by the New York Department of Financial Services got underway Tuesday, regulators explained their priorities while investors expressed concerns.

By Brian Patrick Eha

Opinions expressed by Entrepreneur contributors are their own.

twitter.com/winklevoss
Cameron Winklevoss

Midway through the first day of Bitcoin hearings organized by the New York Department of Financial Services, department superintendent Benjamin Lawsky made his position clear. If the choice comes down to stopping virtual-currency money laundering -- which finances terrorism, narcotrafficking and rogue nations -- and enabling innovation in financial services, money laundering takes top priority.

"It's simply not worth it to society to allow all the things it facilitates to persist," versus allowing "a thousand flowers to bloom on the innovation side," Lawsky said.

Cameron and Tyler Winklevoss, founders of the Winklevoss Bitcoin Trust, an exchange-traded fund currently pending approval by the Securities and Exchange Commission, were among the witnesses testifying before a panel of regulators Tuesday. Cameron acknowledged that when he and his brother, who personally hold a substantial number of bitcoins and have made angel investments in Bitcoin startups, first entered the Bitcoin market, it was the Wild West. "The Wild West attracts cowboys," he said. "A sheriff is a good thing."

Related: 3 Big Misconceptions About Bitcoin

To that end, Cameron asked Lawsky and other members of NYDFS to provide clear regulatory guidelines for Bitcoin businesses, which are currently lacking. "Let us do what we do well," Cameron said -- namely, building the companies -- and "let investors do what they do well," which is performing due diligence on startups, without having to become regulatory experts themselves simply to stay on the right side of the law.

The brothers' testimony came just two days after the arrest of BitInstant CEO Charlie Shrem, who has been accused of participating in a money-laundering scheme tied to Silk Road. The Winklevosses were supporters of BitInstant, having led a $1.5 million seed round in the company in May. The brothers issued a statement saying they are "deeply concerned" about the arrest and will do all they can to help law enforcement.

Related: BitInstant CEO Arrested for Alleged Ties to Silk Road

NYDFS convened the hearings, which will continue Wednesday, to debate whether and how Bitcoin businesses, and virtual currencies themselves, should be regulated. One proposition on the table would require Bitcoin businesses to obtain a special license in order to operate.

Lawsky said he expects his office to put together a proposed regulatory framework for New York-based digital currency businesses some time this year.

But another witness, Fred Wilson, a partner at venture capital firm Union Square Ventures, objected to some of the proposed regulations. With Bitcoin, said Wilson, "We're trying to create a world where money can flow globally for free. You're talking about putting back into the system all the costs we're trying to take out of it."

Related: Bitcoin ATMs Are Spreading Across the World

Brian Patrick Eha is a freelance journalist and former assistant editor at Entrepreneur.com. He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.

Editor's Pick

Related Topics

Business News

Kevin O'Leary Says to 'Survive the Rest of Your Life' You'll Need This Hefty Amount in Your Bank Account

The "Shark Star" explained the concept of passive income based on interest rates.

Growing a Business

10 Creative Content Ideas Inspired by Gary Vaynerchuk to Break Through the Noise

Vee stresses the importance of building lifetime value by capturing audience attention first before chasing immediate conversions.

Business News

Man Sentenced to Prison After Secretly Filming Airbnb Guest in Shower, Threatening Her With Footage

The incident took place in 2020 in a Ceres, California home the guest shared with the owner's son.

Business Process

50 Simple Questions to Ask Yourself Before the New Year

These questions, focused on branding and business growth, can help brands capitalize on past events and help you plan for the year ahead.

Side Hustle

This Millennial Dad Just Wanted to Help His Daughter Care for Her Bearded Dragon. Then His Cricket-Breeding Side Hustle Exploded — Earning $27,000 in One Month.

It wasn't Jeff Neal's first attempt at a side gig, and before long, the "prototypical millennial side-hustler" realized his product had major potential.

Leadership

Why Most People Fail at Giving Presentations — and How to Make Your Next One Successful

Here's what I learned guest lecturing at Stanford: You can become a better presenter by following the "Two Points per Hour Rule."