LONDON (Reuters) - Regulators should create a framework of rules to help to make virtual currencies such as bitcoin more attractive to ordinary consumers, a lawyer from the Bitcoin Foundation said on Tuesday.
Bitcoin made headlines earlier this year when Tokyo-based bitcoin exchange Mt. Gox filed for bankruptcy after saying it might have lost some 750,000 bitcoins in hacking attack.
Patrick Murck, general counsel at the Bitcoin Foundation, said cooperation was needed between authorities to create rules that would support those using the digital currency responsibly.
“There’s an opportunity to work together to stop people saying it’s scary and risky,” he said. “The challenge is just to get a framework out there that makes sense for people,” said Murck, speaking at an event on the state of digital economy.
Launched in 2009, bitcoin offers a way for people to conduct transactions over the Internet. Supporters say the anonymity that bitcoin offers lowers the risk of fraud, while critics say that same anonymity and lack of central oversight make it easier to commit crimes.
The Bitcoin Foundation aims to standardise the currency, protect it from theft or counterfeiting and provide education.
Some companies involved in bitcoin, including investment firms and those providing services for the currency’s users, have also called for regulation to ensure their customers feel more comfortable about virtual money.
A number of regulators, including the U.S. Securities and Exchange Commission, have warned investors about the risks of scams related to virtual currencies.
Murck said there were a handful of well-funded companies working towards making bitcoin more attractive and safer for ordinary consumers by trying to insure bitcoin holdings and to reduce the currency’s volatility.
Those companies have learned from the collapse of Mt. Gox and have more knowledge about how the industry works that was not available before, he said.
Bitcoin could be ready for the mass market by the end of the year, Murck added. “I feel much more confident today than I did 12 months ago. The wind is definitely blowing at our backs.”
The banking industry also has a role to play in opening the bitcoin market up, Murck said, by providing finance to companies involved in bitcoin or integrating bitcoin services into its own products.
Reporting by Clare Hutchison. Editing by Jane Merriman