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After New York, Digital Currency Companies Wait for Chorus or Cacophony from Other States
By Kira Zalan and Lisa Miller
printLove or hate New York's plans to shield Bitcoin and its competitors from financial crooks, one thing is certain: the proposal is only the first of dozens that will shape the industry. Last month, the burgeoning sector of tech-savvy entrepreneurs and venture capitalists got an initial look at the state's planned anti-money laundering (AML) rules for digital currency companies that want to obtain so-called "BitLicenses." The licenses would require the businesses to retain identifying and transactional data on their clients, among other controls. The proposal, which would additionally mandate that licensees annually assess their risks and more closely scrutinize foreign...
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New York's financial regulator could soon hone expected rules on the use of virtual currencies after industry representatives complained to the agency that parts of its initial plan were vague.
Virtual currency businesses operating in New York may soon have to obtain special licenses and establish anti-money laundering, cyber security and consumer protection programs, the state's banking regulator announced Thursday.
More than a year into an effort by the digital currency industry to convince critics that its promise doesn't extend to criminals more than consumers, Bitcoin proponents are questioning whether they have the right messenger to deliver their message.
For all of the legitimate concerns and overheated rhetoric about the rise of crypto-currencies, the biggest problem for Bitcoin may be one seldom discussed by critics: its abuse by tax dodgers.
Federal lawmakers are unlikely to move quickly to regulate digital currencies despite congressional skepticism about the technology, a senate staffer told attendees of a Bitcoin conference in New York.
With New York rules for digital currency exchanges in the works, other states are stepping up to draft rules of their own, speakers at a Manhattan Bitcoin conference said Monday.
New York should require some digital currency companies to collect and periodically verify customer information to deter financial criminals, Manhattan's district attorney told state regulators Wednesday.
With greater regulatory clarity, U.S. banks would embrace the digital currency companies they currently turn away due to compliance concerns, Bitcoin investors told New York State regulatory officials Tuesday.
Turned away by American banks, some U.S.-based digital currency companies are using foreign bank accounts to send their proceeds back into the United States to pay employees and clients.
U.S. officials have sent formal warning letters to a number of virtual currency firms it suspects have failed to register as money services businesses, the head of the nation's financial intelligence unit said Tuesday.
The regulatory concerns of Bitcoin and other digital currency platforms may extend beyond the anti-money laundering requirements outlined by the U.S. Treasury Department earlier this year, lawmakers and congressional witnesses said Tuesday.
Lawmakers are asking the IRS to quickly finalize guidance on potential tax liabilities of digital money, including the crypto-currency platform Bitcoin.
The indictment Wednesday of an online black market for narcotics and weapons vendors could further hamper proponents of a growing digital currency in the eyes of bank compliance officers.
Nearly all digital coins studied by researchers at the University of California in San Diego were used to purchase goods from a black market Web site selling illicit goods, a recent study found.
As digital currencies like Bitcoin continue to gain popularity, banks may have to train their compliance officers on the technical means to trace such money movements, according to Daniel Wood, an assistant general counsel with the Texas Department of Banking.
The second installation of a two-part story on how the Bitcoin market is changing under the scrutiny of federal and state officials.
Even as the use of Bitcoin grows, the differences in opinion about the risks the digital currency poses only seems to get larger.
When FinCEN issued its innocuously entitled guidance, "Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies" in March, an already speculative currency may have received its death blow.
The alleged money laundering of $6 billion through bank accounts controlled by a virtual currency operator and its accomplices reflects widespread and serious anti-money laundering vulnerabilities, say industry experts.
The U.S. Justice Department is expected to decide within the fiscal year whether prosecutors can bring charges against entities using a controversial virtual currency, an FBI official said Thursday.