It is worrying to me that the public exchanges have so few bids and offers most of the time, and that it is extremely common for people to deal in these things privately to avoid moving the price.
This is an issue right now because it's much easier to go long on BTC than it is to go short.
Since virtually everyone in the market is long BTC, they desperately want the price to go up, rather than down. This creates an incentive to do OTC (some might say "under" the counter) trades rather than go through MtGox, particularly if the true market rate is less than what MtGox is showing.
However, if it was easier to go short BTC then you'd have people who wouldn't be afraid (and would in fact very much like!) to see the market price go down, and would be more than happy to see declining prices show up in the public order book.
There's a lot of strange behavior in the BTC market and I think a lot of it is because you can't trade it like most currencies or even commodities. You can't easily go short, you can't trade futures, etc. Allegedly MtGox and others are working on those issues, but it's hard to do significant margin and futures trading where everyone is anonymous.
But the sooner they make other forms of trading available, the sooner I think we'll see the unrealistic bullishness calm down.
The GP doesn't want it outlawed, just doesn't want people to specifically choose to have transactions privately for fear of moving the price, because that's a sign that the market isn't healthy. A healthy market should be resilient against normal trading.
