"Today in the global financial system there are common regulations around things like 'knowing your customer' and anti-money laundering, and I think those are going to get applied in this (bitcoin) as well," said Allaire, the CEO of Circle, which builds products that let businesses and individuals pay and accept bitcoins.
"As the monetary base in digital currency grows, it will create new issues for central banks to think about how this interacts with their existing systems from a financial stability perspective — but that is going to take a good decade or two," Allaire added.
Circle was launched last October with a $9 million investment from venture capitalist Jim Breyer, Accel Partners and General Catalyst Partners.
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Some 12 million bitcoins are believed to be in circulation at present, even though no central bank issues them. They are instead generated online, via a process known as mining, and their volume is capped at 21 milion.
Allaire forecast a decline in the very high level of volatility seen in the price of bitcoin of late.
"As you see more institutionally focused exchanges set up in places like London and New York, that provide mechanisms like derivatives, shorting and hedging, and real institutional participation, I think you will see a much more stable price," Allaire said.
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