Thursday, June 27, 2013

The new enemy of the Government

Bitcoin is the new enemy of the Government.

Banking regulators in California, New York and Virginia in recent weeks have issued warnings to virtual-currency exchanges and other companies that deal with bitcoin that they could be closed down if their activities run afoul of state money-transmission laws.

The US Treasury will insist that virtual currencies comply with anti-money-laundering laws.

US Financial Crimes Enforcement Network issues guidance on virtual currencies, suggesting Bitcoin
exchanges are in for greater scrutiny.

FinCEN’s reg ulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the
country of issuance.” 

In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction.

This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.

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