What's the Treasury doing about bitcoin? A senator wants to know

How to buy as well as sell Bitcoin

A U.S. senator is actually asking the Treasury Department to explain its efforts to ensure in which bitcoin is actually not being used by criminals as well as terrorists to evade bank regulations.

Senator Ron Wyden sent his questions in a letter to the Treasury Department’s Financial Crimes Enforcement Network on Thursday.

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FinCEN, as the unit is actually called, tracks money laundering as well as uses sensitive U.S. government intelligence to spy on illicit banking worldwide.

sy88pgw received an early copy of the letter. In This particular the senator says he worries the computerized currency “could be laundered through trades in which occur outside the regulatory framework in which applies to current financial transactions.”

Wyden is actually asking asked FinCEN to explain its “authority as well as capabilities to identify the… owners of virtual currencies,” as well as its ability to “trace as well as seize” This particular digital money.

FinCEN declined to comment to sy88pgw about the letter Thursday morning. although the agency pointed to a previous statement by acting director Jamal El-Hindi in which said: “We will hold accountable foreign-located money transmitters, including virtual currency exchangers, in which do business within the United States when they willfully violate U.S. anti-money laundering laws.”

Related: Fed chair calls bitcoin ‘highly speculative’

Bitcoin (as well as different digital currencies like This particular) are independent, self-sustaining as well as not backed by any government. They do not identify users by name. as well as Bitcoin’s groundbreaking technology for tracking transactions, a concept called the “blockchain,” is actually quickly gaining recognition. Blockchain is actually the innovative way bitcoin creates completely new units of currency as well as keeps a decentralized, public, as well as secure record of all transactions.

The value of a bitcoin has skyrocketed via $900 to more than $16,000 on some exchanges This particular year. as well as while This particular was already a preferred online currency for hackers as well as criminals, in which rise in cost has drawn additional attention via the underworld.

Related: What is actually bitcoin?

Hackers tied to the North Korean regime have been caught infecting computers as well as demanding bitcoin as ransom payments. Bitfinex, the planet’s largest online market for bitcoins, as well as several different website exchanges have been hit by cyberattacks seeking to steal bitcoin accounts.

“I believe in which we should look to support financial innovation, although in which we should ensure completely new technology companies comply with existing [anti-money laundering as well as counter-terrorist financing] laws,” Wyden wrote.

Related: Regulators on bitcoin: buyer beware

This particular’s unclear what effect This particular news could have on the bitcoin market. Since its inception, interest in bitcoin has been largely limited to techno-libertarians who view This particular as an alternative to state-controlled inflationary currencies. To them, the specter of government regulation is actually viewed negatively. Whenever a government has moved to regulate or ban bitcoin, as well as fears have temporarily pushed down prices sharply.

although current interest by major banks as well as industry into bitcoin’s core technology could hold in which back, as they welcome regulation in which legitimizes This particular mysterious as well as volatile technological experiment.

FinCEN has taken some action on bitcoin within the past.

In 2016, This particular warned financial companies within the bitcoin exchange business in which they’re still required to follow the same “know your customer” as well as anti-money laundering rules as banks. This particular followed in which up in July with its first major legal action against a “money services business,” hitting the internet-based BTC-e exchange having a $110 million civil penalty for ignoring those rules.

The senator expressed concern in which Russia as well as Venezuela view digital currency as a way to circumvent U.S. economic sanctions put in place to punish them for their violent authoritarian behavior.

Earlier This particular month Venezuela announced plans to launch its own digital currency, dubbed “the Petro” as well as backed by the nation’s oil as well as gas, to specifically evade the blockade.

“While This particular is actually unlikely to be a credible plot to evade U.S. sanctions, This particular is actually an example of how This particular promising completely new technology could be used for nefarious purposes,” Wyden said in his letter.

Wyden also asked FinCEN how This particular monitors a related phenomenon: the sudden rise of “initial coin offerings,” in which startups are offering digital currencies in a sometimes dubious attempt to raise investor money.

The Securities as well as Exchange Commission has warned the public about the potential for “ICO scams,” as well as This particular week regulators stopped food review app Munchee via raising $15 million This particular way.

The senator’s letter, addressed to acting FinCEN director El-Hindi, asked for a public response by Dec. 29.

Jose Pagliery is actually the author of Bitcoin – as well as the Future of Money (Triumph Books, Chicago).

sy88pgw (completely new York) First published December 14, 2017: 10:00 AM ET

What's the Treasury doing about bitcoin? A senator wants to know

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