Bitcoin To Be Regulated Under US Money Laundering Laws 439
Newsubmitter davek writes with news that the U.S. will be applying money-laundering laws to Bitcoin and other 'virtual currencies.'
"The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. WU +0.17% They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000. Moreover, firms that receive legal tender in exchange for online currencies or anyone conducting a transaction on someone else's behalf would be subject to new scrutiny, said proponents of Internet currencies. 'I think it's inevitable that just like you have U.S. dollars used by thieves and criminals, it's sadly inevitable you will have criminals use a virtual currency. We want to work with authorities,' said Jeff Garzik, a Bitcoin developer. Still, law enforcement, regulators and financial institution have expressed worries about the hard-to-trace attributes of virtual currencies, helping trigger this week's move from the Treasury's Financial Crimes Enforcement Network, or FinCen."
What about gold mining in WoW? (Score:4, Interesting)
People exchange cash for the virtual currency, and exchange the virtual currency in the game all the time. Will Blizzard be subject to book-keeping and regulations?
What about other games with credits and item trading?
This is meant to kill Silkroad (Score:5, Interesting)
They will use this law to strike against Silk Road.
Remember, Capone was convicted on federal charges of tax evasion.
Re:They don't get it (Score:0, Interesting)
I've never exchange it out, and I've bought 1000's of USD worth of stuff off Amazon.
Money Laundering is a Non-Crime (Score:1, Interesting)
Re:They don't get it (Score:3, Interesting)
No. You don't get it.
The gold standard also works if there are no "firms" to issue or exchange it. People can do transactions person-to-person with no intermediary. Or, heck, cash transactions - me buying a truckload of goods in exchange for cash payment cannot be directly regulated.
What CAN be regulated are transactions through banks and financial firms. You can sell a truckload of goods for cash no problem, but depositing $1,000,000 in cash will raise some eyebrows. Similarly, you can buy all the bitcoins you want. And you can exchange them directly with whoever you want. But if you want to exchange a large number of US dollars for them (or vice versa) via a financial firm, they're going to ask questions. The financial firm will have to track and report it.
You can do whatever you like out in the shadows. It's when you hook things up to the "mainstream" financial markets that these regualtions apply.
Which is why it's effective for money laundering. If you have a wadge of dirty cash, you can't really go out there and buy bitcoins "one at a time" through individual transactions until you've converted it all. You need to go through a large, organized market. Which requires an exchange. If you're doing very high value transactions, they want some reporting on where the "other side" of the transaction into/out of bitcoins came from and where it's going.
Re:Translation: Here Comes Big Brother (Score:3, Interesting)
If the largest harm in cracking down is to listen to you whine, I'd happily take the law. Tax dodges and more importantly drug slingers are the major problem in society and they directly/indirectly kill thousands of people yearly in US/Mexico alone. Your high minded slights on over-reaching control fanaticism makes me sick to my stomach. Get a grip and reality and tell me your GOVERNMENT is the bigger threat than the gang bangers around the corner.
Re:Where can you trade BTC options? (Score:2, Interesting)
bitcoin is already a pyramid get-rich-quick-scheme for enriching early adopters. You wanna add options trading to its features so insiders can pump and dump and fleece latecomers some more?
Re:They don't get it (Score:3, Interesting)
What happened to things like the 4th amendment or innocent until proven guilty? If the govt. has a reason to belive someone is involved in crime, then they can get warrant to then have the bank notify them if that person is making large transactions. It should not just be a big fishing expedition where people have to prove their innocence every time they make a transaction over an arbitrary amount.
Why not just randomly raid the houses of people in rich neighborhoods to make sure they aren't doing something illegal? Or pull over every other car and search it to see if they have drugs or weapons? If your not doing anything illegal what are you worried about right?
Re:They don't get it (Score:4, Interesting)
I would like to see anyone try to take on such a huge network. A bank couldn't afford to do it. Perhaps with the NSA's budget they may have some crypto chip that could outhash anything out there. Otherwise I simply don't see how to take over 51%.
Right now the bitcoin network is using 58.710 T/hashes. Everything is gauged in Mhashes so that is 58 billion 710 million M hashes. Top GPU does 1200 Mhash so you'd need about 49 million in GPUs of them running. At $777 each that's 38 billion to duplicate the network, doubling it. Not including anything else on a computer.. no boards, no CPUs, no electric to run them. I think my math is right.
Total value of all bitcoins if bought outright is 10,936,000 BTC * $72 = 787 million. Sure an entity could try to buy every coin out there. That'd be interesting to see if that would shoot the price even higher. I'm not sure how that would play out. But BTC can go 8 decimal places so even if they get very expensive people can use small portions of them.
Shutting down the peer to peer network is about the best that would be doable. Outlaw bitcoin, shut off anyone using it, and perhaps. But there is an estimated $2 million USD done on the silk road every month so people are fine doing illegal things.
This is all about control. Bitcoin was created to avoid the banks. There is no way to "print" more USD to buy treasury bonds like we're doing now. The banks with direct ties with the government is probably fearful this idea of being able to avoid banks entirely actually catches on. That would not be good for business.