Dec 112013
 

In response to my earlier “The Miami Century,” a reader asks:

I would appreciate your view on Bitcoin / cryptocurrencies and the US regulatory framework and law makers. Most innovation in finance during this decade most likely takes place in virtual currencies and related areas. Do you see any major hurdles for Miami coming from the regulators and law makers?”

The short answer is that the future is unknowable, but it is not unimaginable. No one knows what the future holds, but it would be odd for US regulators to let Bitcoin develop further, if their plan were to shut it down.

If Bitcoin really is the Next Big Thing, as I called publicly 19 March 2013, American regulators and legislators are going to be loath to see this market migrate to Panama, Singapore, and—Heaven help us all!—China.

The USA is home to the New York Stock Exchange, Space X and Virgin Galactic, Microsoft and Apple, Facebook, Google, Amazon, Linus Torvalds, and Silicon Valley; and the Americans like it that way.

They’ll want Bitcoin and crowdfunding to be centered here, as well.

US officials’ three main concerns in this context are tax evasion, money laundering, and terrorism financing.

  • Tax evasion could be put to rest by changing the focus of taxation from things that are easy to hide—e.g., income, virtual assets, offshore trusts, etc.—to things that are hard to hide, like cars, gasoline stations, ports, wholesale consumer goods, buildings, and land.
  • Money laundering similarly could be put to rest by ending the War on Drugs, and the pendulum seems to be swinging in this direction.
  • If one believes the actual statistics on this, terrorism is less of a real-world concern than lightning strike, slipping while bathing, or texting while driving. Considering that the vast majority of successful home-grown terrorists in the USA have been white guys, people in the USA are growing weary of jumping at every brown shadow.

For this reason, I am watching the 2014 Congressional elections and the 2016 general election in the USA very closely. I expect that the news will be either very, very good or very, very bad for Bitcoin. That I remain in my native South Florida after having lived all over the USA, in Western Europe, and in the Caribbean over the past embarrassingly many decades, is evidence of my cautious optimism.

With regard to Miami specifically, for good or ill, we South Floridians have a well deserved reputation for having a healthy disdain for Anglo-Saxon formalisms. If Bitcoin is going to flourish anywhere, this is one of the most likely regions in the world. We are not great engineers, but you should see us move people, cargo, and money around!

We already have a strong and growing Bitcoin market between here and Argentina, Brazil, and Venezuela, which have currency controls. It is increasingly common for Latin American programmers, graphic designers, and website developers to ask foreign clients to pay them in Bitcoin, so that they can carry their savings with them, when they come up here to visit friends and family and to go shopping.

TL;DR: Invest in South Florida Bitcoin startups that focus on international trade, and make sure that the principals speak Spanish, update their passports, and have filled their vaccination cards, in case you want to relocate them in a hurry.

Invest accordingly.

Prof. Evans