Bitcoin Foundation Meets With U.S. Regulators, Law Enforcement
A Bitcoin trade group met with members of the U.S. Treasury Department’s Financial Crimes Enforcement Network, regulators and law-enforcement officials to discuss the digital currency.
Members of the Bitcoin Foundation yesterday briefed representatives of agencies including the Federal Bureau of Investigation, Internal Revenue Service, Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and Secret Service on the nature of the virtual currency, created four years ago.
“It’s a kickoff of engagement,” said Peter Vessenes, chairman of the foundation’s board, who said before the meeting that it would be “standing-room only,” because of interest among government officials. “Right now, law enforcement would read a salacious story, and not know what’s going on. We can help them understand what’s going on.”
FinCEN released guidance in March saying digital-currency administrators and exchangers are considered money-services business subject to regulations and anti-money-laundering controls. Stephen Hudak, a FinCEN spokesman, called this a “routine” meeting.
Bitcoin Foundation, a Seattle-based group that promotes the currency, seeks to improve standardization and security for the “non-political online money,” according to its website. Vessenes described the meeting as an “educational meet-and-greet.”
Marco Santori, chairman of the foundation’s regulatory affairs committee, said the government officials asked “a lot of questions” and that he hopes to work with their agencies and others in the future. “It’s only the beginning of the conversation,” he said.
The discussion is “part of our ongoing dialogue with virtual currency providers,” John Sullivan, a Treasury Department spokesman, said in a telephone interview.
The OCC sent three staff members to the “informational presentation,” said Bryan Hubbard, a spokesman for the agency, which regulates national banks.
Bitcoin was designed by a person or group using the name Satoshi Nakamoto, and the actual currency is created through a system called mining, in which connected computers process Bitcoin transactions and earn their owners Bitcoins as a reward. According to Blockchain.info, there are more than 11.5 million Bitcoins in circulation.
They can be used to buy and sell items ranging from cupcakes to illegal narcotics, and the surge in their value has created millionaires out of early collectors. The potential difficulty in tracking illegal transactions has drawn the attention of regulators.
New York’s top banking overseer, Benjamin Lawsky, sent subpoenas to 22 digital-currency companies, including BitInstant LLC and Dwolla Corp., to determine whether new regulations should be adopted to govern the emerging industry, according to a person familiar with the matter. The Senate’s Homeland Security Committee is also examining possible risks of the virtual currency, it told regulators in a letter earlier this month that sought information on their oversight.
Cameron and Tyler Winklevoss, who gained fame after the brothers’ legal clash with Facebook Inc. co-founder and Chief Executive Officer Mark Zuckerberg over the origin of its social network, filed with the Securities and Exchange Commission to create the Winkelvoss Bitcoin Trust -- a variation of an exchange-traded fund that would hold Bitcoins.
To contact the reporter on this story: Jesse Hamilton in Washington at firstname.lastname@example.org.