This bit is very interesting:
Pursuant to the agreement, Ripple Labs will also undertake certain enhancements to the Ripple Protocol to appropriately monitor all future transactions.
Could regulators put pressure on Bytemaster & co to change the BitShares protocol? Of course the answer to that would be "the community has the source code and wouldnt accept those changes" (I would fork them out immediately).
Is the main difference that Ripple was selling the XRP themselves, so its not really centralized whereas BitShares isnt really owned/sold by any one group?
It helps to consider different classes of activity.
Done right, I would expect to see the following.. and it seems the UK perhaps is gearing up for this.
Ripple is clearly Class 2 below and no surprise from the fine, I would expect strict KYC and AML will be enforced on them.. quite right too.
BitShares atm is Class 3 and perhaps BTS could be considered Class 1.
Class 1: Money
# Would expect: No regulation or Government intervention needed here.
Class 2: Money transport
# Would expect: KYC and other consumer protection and the usual requirements for money transfer services, might be appropriate.
Class 3: Tokens with value pegged to match other assets
# Would expect: No regulation or Government intervention needed here.
Class 4: Tokens that are explicitly linked to real world assets
# Would expect: Government could help establish licensing and making the law clear and responsive in ways that help evidence and enforce the explicit link between digital token and asset.
Class 5: Zero value applications, such as private key signing.
# Would expect: No action at this time.
and then also, I've suggested before:
Class 2 and Class 4, could benefit from having a certain level of Government regulation and consumer protection. While digital currencies or tokens can represent value, it is only those explicitly linked to real world assets and wealth that need Government regulation and consumer protection. Blockchain technology, for all its acting in place of third party authority, cannot bridge the gap from the internet into the real world.
Class 1 and Class 3, needs no regulation by Government and would suffer from that. The exchange of those classes between people, might need to be acknowledged and understood by courts and in legislation. To be clear, the values within these digital currencies and pegged assets, are a private concern and it would be inappropriate and unnecessary for Government to interfere with those interests.