On the 26th of February Senator Joe Manchin (D-W.Va.) has announced his determination to complete the ban of the most popular and valuable cryptocurrency Bitcoin on the territory of the United States of America. His claim is issued and populated in form of a letter addressed to numerous receipts, including organizations, authorities and particular persons. His attitude is sublimated in a single citation from his writing – Bitcoin is “disruptive to our economy”.
The letter is addressed to the Treasury, Federal Reserve, several financial regulatory agencies, and in particular to Secretary Lew, Chairwoman Yellen, Commissioner Curry, Acting Chairman Wetjen, Chairman Gruenberg, and Chairwoman White. The Senator sees a massive threat in the Bitcoin due to money laundering, online and offline crimes, distribution of illegal matters, fraudulences and asks not just for plain regulation and control, but for a ban. The prohibition of the matter has to be considered by responsible offices in shortest terms.
He expresses his hopes as following:
“I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.”
In the beginning of the text, the Senator provides some background information on the basic principles of cryptocurrencies, describing them as an attraction for criminals seeking options to hide particular illegal activities. He believes:
“Due to Bitcoin’s anonymity, the virtual market has been extremely susceptible to hackers and scam artists stealing millions from Bitcoins users. Anonymity combined with Bitcoin’s ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.”
Senator Manchin has already written to regulators on the Silk Road case and the overall necessity to control the situation. He sees that the termination of the operation of the platform does not limit users from making uncontrolled purchases:
“Bitcoin has also become a haven for individuals to buy black market items. Individuals are able to anonymously purchase items such as drugs and weapons illegally.”
As example and main reference are used previous bans issued by emerging Asian economies, like China, Thailand and South Korea, who have issued legislative prohibitions and the EU together with other European countries, like Russia, who have populated warnings addressing the legal entities and private users, also showing the lack of tolerance. Senator concludes:
“While it is disappointing that the world leader and epicenter of the banking industry will only follow suit instead of making policy, it is high time that the United States heed our allies’ warnings. I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency.”
He points out two doubtful aspects of the virtual coin – the deflationary nature and the fluctuating uncontrolled prices, recognized by colleagues from the mentioned above countries. Currently, the FBI and U.S. Attorney are working on the case of Mt.Gox to determine illegal activity and breaking of laws. Senator states that such events as the collapse of the leading exchanger is a regular happening in the Bitcoin environment, actually made on purpose to influence the price of the currency. The only winners at the end of the dipsy doodle are going to be the miners. Ordinary people are definitely going to lose:
“In addition, its deflationary trends ensure that only speculators, such as so-called “Bitcoin miners,” will benefit from possessing the virtual currency. There is no doubt average American consumers stand to lose by transacting in Bitcoin. As of December 2013, the Consumer Price Index (CPI) shows 1.3% inflation, while a recent media report indicated Bitcoin CPI has 98% deflation. In other words, spending Bitcoin now will cost you many orders of wealth in the future. This flaw makes Bitcoin’s value to the U.S. economy suspect, if not outright detrimental.”
The Senate Homeland Security and Governmental Affairs Committee have reported similarly this month:
“There is widespread concern about the Bitcoin system’s possible impact on national currencies, its potential for criminal misuse, and the implications of its use for taxation.”
Senator Joe Manchin finishes on elevated tones:
“Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.”