The failure of Mt. Gox could lead to a shakeout in the virtual currency.
The apparent collapse of bitcoin’s best-known and once-dominant trading platform has provoked outrage among its users, but it has also stirred hopes that the way may now be clear for more established players to transform and rein in a largely unregulated market.
Hours after it stopped trading without warning Monday night, the secretive bitcoin exchange Mt. Gox said that it would “close all transactions for the time being in order to protect the site and our users.” The action and brief statement left users wondering where their money went, amid accusations that as many as 6 percent of the bitcoins in circulation — worth more than $300 million at current exchange rates — were missing.
Outside the offices of Mt. Gox in central Tokyo, disgruntled bitcoin traders and their supporters held up signs that read “Where Are My Bitcoins?”
“I’m filled with disbelief,” said Kolin Burges, a trader from London who flew to Japan this month after the exchange stopped paying out funds. “I was prepared for the worst, but it’s hard to believe they might have lost their coins.”
Yet the unanswered questions about Mt. Gox did not shake the faith of many in bitcoin. With one of its earliest online marketplaces seemingly gone, the world of virtual currency may be forced to become a more mature part of the financial system.
“I think it’s a significant event, but I think there’s a decent chance that it is part of what we would call this sort of shaking out of the industry as it matures and slowly becomes a little more regulated,” said Benjamin Lawsky, New York state’s top financial regulator.
Lawsky is not the only regulator trying to determine the next steps. Three commissioners from the Commodity Futures Trading Commission were at a meeting recently where bitcoin was on the agenda, and the agency’s lawyers are examining the regulators’ options, according to a person briefed on the matter who spoke on the condition of anonymity.
The interest in bitcoin is that its underlying technology holds the promise of allowing users to move money around the world without using an intermediary, thus lowering the cost of transactions.
Troubles at Mt. Gox have rattled the bitcoin world before. A year ago, the exchange suspended operations for several hours, and bitcoin trading nearly ground to a halt.