New York and U.S. Examination of Bitcoins

State and federal officials are starting investigations on virtual currencies like Bitcoin and discussions on its regulations.

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New York and U.S. Examination of Bitcoins

State and federal officials are starting investigations on virtual currencies like Bitcoin and discussions on its regulations.

The Senate’s committee on homeland security are concerned about threats and risks coming from virtual currency. Virtual currency, which is not controlled by authority regulations, is getting more and more popular. Therefore, government’s lack of information and control over this situation brings up such questions.

One of the Senate Committee’s investigator, who preferred to stay anonymous because the investigation is still in process, said that virtual currency is something that it not going to disappear and is even developing and spreading every day, and therefore it need government attention.

New York’s top financial regulator, Benjamin Lawsky, sent subpoenas to 22 companies, which had any connection to bitcoin. Before, regulators haven’t made any effort to track on those who have taken advantage of virtual currency. However, now these investigations have shown a lot of government attention and their effort to control new phenomenon.

One of the most well- known digital currencies is Bitcoin, which was brought up by anonymous Japanese computer programmers in 2009. Their goal was to make Bitcoin an alternative choice to conventional currencies. Bitcoin digital currency works based on a mathematical formula. This unique currency is not regulated by authorities and there only a limited number of bitcoins, since governments cannot print the currency. On Tuesday, bitcoin price was about $108 online.

Lawmakers are concerned that bitcoin might be used for illegal products, such as drugs and child pornography, for tricking investors and for avoiding taxes. Lately government is very active accusing bitcoin users, when taking advantage of virtual currency and profiting a lot from it. For example, last month a Texas man was accused of using Ponzi scheme to profit from bitcoins. Another virtual currency, called Liberty Reserve, representatives were also accused of running a multi- billion money- laundering circle.

The Senate states in the letter that the federal government should deal with the potential threats and risks shortly. Mr. Lawsky as well as the Senate committee believes that this technology could have good uses, although new regulations would not harm and even help the industry and protect users.

Mr. Lawsky gives his opinion in a formal note released this Monday: “If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country’s national security, but also the very existence of the virtual currency industry as a legitimate business enterprise.”

Mr. Lawsky gives his opinion in a formal note released this Monday:

“If virtual currenciesremain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country’s national security, but also the very existence of the virtual currency industry as a legitimate business enterprise. ”

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