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First of all the FBI have closed Liberty Reserve, a Costa Rica-based centralized digital currency service. After this, the feds closed the Silk Road, an underground website of illegal drugs that accepted only BTC, and arrested the owner of Silk Road.
US Senate , Virtual Currency , DHS
First of all the FBI have closed Liberty Reserve, a Costa Rica-based centralized digital currency service. After this, the feds closed the Silk Road, an underground website of illegal drugs that accepted only BTC, and arrested the owner of Silk Road. Bitcoin is the most-coveted decentralized digital currency, and at the moment the federals are really thinking a lot of this next generation virtual currency.
On Monday US Senate will hold hearings on the Bitcoin and other digital currencies case. More precisely, the hearings will be hold in the Senate Committee on Homeland Security and Governmental Affairs. And before the hearing 5 federal agencies that are most vulnerable and have bigger experience in the digital currency field, have sent the Committee letters where explained they are ready to undertake this sensitive issue. The letters suggest that all 5 federal institutions are carefully supervising digital currencies, although some of them really understand that electronic currency is used legally and is out of keeping with criminal action.
It is said in the letters that year before the Federal Bureau of Investigation have set up an interdepartmental task force - the Virtual Currency Emerging Threats Working Group. Peter Kadzik, the representative of the Department of Justice, wrote in the letter that FBI acknowledges the potential of a currency to smooth the way for funds to move globally, thus the Bureau will have to collaborate with their American and foreign partners.
Thought the feds cannot consider every virtual currency as a potential assistant of the criminals. The Bureau approaches that all digital currencies - virtual money and cryptocurrency - in the future for sure will be offered by legal financing facilities like banks.
The Treasury Department endorsed the words said by Department of Justice that virtual currency is used legitimately. However Alastair Fitzpayne, Treasury's assistant secretary, added that nowadays the legal and illegal use and potential of virtual currencies are very close to each other and federal agencies actually have no right to split it.
The most rigorous words were said by the Department of Homeland Security. Brian de Vallance, DHS Acting Assistant Secretary for Legislative Affairs, wrote that anonymousness in the internet and virtual space give the criminals a chance to legalize big money without being detected by US and international agencies. DHS confirmed the situation when transactions of money were used by criminals appeared right after the debut digital currencies. The Department added the federal agencies need to work on better and more aggressive regulations to root out this expanding trend.
The Department of Homeland Security has additionally brought to light the mistakes in the platforms of payment processors and the whole network of virtual currency exchangers. This May the DHS seized and froze funds at biggest bitcoin exchange market Mt. Gox. After this action the biggest part of international clients felt suspicious to use Bitcoins because it was almost impossible to transfer money to customers within the USA.
Bitcoin companies who involved in selling bitcoins for US dollars even now manage to complain that they are working in a grey zone where no one can be sure their activities are in order with the state and federal law.
This year in August the Committee Chairman Thomas Carper wrote all the federal institutions and asked them to start controlling digital currencies. Between August 30 and November 12 the responses were received only from DHS, the Securities and Exchange Commission, Treasury, the DoJ, and the Federal Reserve.
It is totally obvious the federals are interested in controlling virtual money but in particular they are neutral, mentioned Faisal Islam, director of Compliance Advisory Services with Centra Payments Solutions, a financial services consultancy. He added that all agencies are saying this action will have good purpose, however there are also many disadvantages.
A spokeswoman for Senator Carper said in her statement that chairman Carper is grateful to agencies for the responses and the Senate will expects a discussion of these and other aspects of methods to regulate digital currencies at the hearing scheduled for Monday.
Image source: wired.com
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