Bitcoin and other digital currencies will get more attention from the U.S. Consumer Financial Protection Bureau after prodding from a congressional watchdog.
The Government Accountability Office, the investigative arm of Congress, wrote in a confidential report last month that the bureau, created by the 2010 Dodd-Frank financial regulatory overhaul, needed to become more active in developing U.S. digital-currency policies. In a written response, the agency agreed.
“We’re looking forward to increasing our involvement in formal working groups as they engage on specific issues relating to consumer protection,” William Wade-Gery, CFPB’s acting assistant director for card and payment markets, wrote in a May 6 letter to the GAO.
While the GAO report didn’t specify the issues that should be addressed by the CFPB, fraud and security have been serious problems for some bitcoin users. For example, an exchange based in Tokyo went bankrupt in February after losing most of its users’ accounts to hackers.
“Thus far, interagency efforts have had a law enforcement focus, reflecting the attractiveness of virtual currencies to those who may want to launder money or purchase black market items,” the GAO said in the May report that was posted yesterday after Bloomberg News wrote about its findings.
Senator Tom Carper, a Delaware Democrat who held the first hearings on Bitcoin last year, sought the report to clarify what the U.S. government is doing to build a legal framework for digital currencies that cross regulatory boundaries. Bitcoin, for example, can be used like money even while it resembles a commodity, and can function like a payment system.
“GAO’s report underscores the importance that all sectors -- law enforcement, industry, relevant regulators, and consumer protection agencies -- must come to the table and engage in meaningful dialogue to provide clear rules of the road for entrepreneurs, investors, and consumers alike,” Carper said in an e-mailed statement.
Bitcoins emerged in 2009 out of a paper authored under the pseudonym Satoshi Nakamoto. Since then, retailers selling items from Gummi Bears to luxury homes have started accepting bitcoins, and new companies have begun offering ways to ease its use as a payment system.