More Bitcoin Regulation Is Inevitable

regulationsny03 Feb 2014 / NY Times – The next phase in the development of virtual currencies like Bitcoin was highlighted at a hearing last week conducted by Benjamin M. Lawsky, New York State’s top banking regulator. The question is not whether there will be greater regulation of firms developing new methods of transmitting payments with nongovernment currencies, but how much regulation they will face.

The idea that Bitcoin could be an alternative to traditional money that would allow users to conduct transactions anonymously beyond the pale of intrusive government regulators has proved to be little more than a pipe dream. In testimony at last week’s hearing, Barry E. Silbert, the founder of Bitcoin Investment Trust, acknowledged that “it may be appropriate to regulate any transaction that involves an unregulated intermediary converting Bitcoin to dollars on behalf of a third party.”

As if to make the message especially clear that the government is keeping a close eye, the Justice Department unsealed a criminal complaint the day before the hearings charging two men with using a Bitcoin exchange to help pay for illegal narcotics transactions. One defendant, Charlie Schrem, was on the board of the Bitcoin Foundation, which is promoting the virtual currency as a new means for conducting business around the world.

Federal regulators have already been going after companies that allow payments in virtual currencies. In March 2013, the Financial Crimes Enforcement Network, a part of the Treasury Department known as FinCen, issued guidance stating that anyone operating an exchange for virtual currencies would be considered to be running a money transmitting business….. Read more

Follow Twitter

Exchange Rate