E-commerce offers an enormous range of solutions to payment and settlements problems. However it also poses a myriad of regulatory issues. Understanding the technical, taxation and institutional issues posed by e-commerce that impact the ability to provide such services aids in comprehending the vast integrity and security issues surrounding this innovation. In this chapter the effect of this technological innovation is examined in the light of theories of regulation that postulate a struggle process between attempts to control innovation and further innovation and regulation. To understand how regulation of e-commerce may be counterproductive, a case study of the evolution of regulation of derivatives is used to test a hypothesis concerning social and avoidance costs. A comparative case study of regulation of e-commerce is then examined to suggest a policy approach of a private sector solution within a public policy matrix similar to private deposit insurance.