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Bitcoin To Be Regulated Under US Money Laundering Laws 439

Posted by Soulskill
from the government-smells-funding dept.
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."
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Bitcoin To Be Regulated Under US Money Laundering Laws

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  • They don't get it (Score:5, Insightful)

    by lalena (1221394) on Friday March 22, 2013 @12:26PM (#43247615) Homepage
    Bit Coin works even if there are no "firms" to issue or exchange. Therefore, there is no one to regulate.
    • by Anonymous Coward on Friday March 22, 2013 @12:34PM (#43247753)

      They regulate entities that exchange bitcoins for dollars.

      If the average user can't exchange bitcoins for dollars, what good is it?

      • Re: (Score:3, Insightful)

        by countach (534280)

        What good are dollars? They are just pieces of paper. Oh wait, you can exchange them for stuff, like you can with bitcoins.

        • by hedwards (940851) on Friday March 22, 2013 @12:58PM (#43248051)

          Not really, USD are taken by anybody in the US that lends money as well as for taxes. BTC are basically just useful by a small number of people that aren't very good at math. The rest of us stick to currency and barter of things that actually exist.

          Now, if BTC was a mandatory option for payment and was likely to continue that way into the future, then it would be a closer analogy. But, even there with the fixed maximum supply and the curve at which they're being introduced, being what they are, even then it would be a stretch.

        • Re: (Score:3, Funny)

          by h4rr4r (612664)

          You need them to pay taxes, can't do that with bitcoins.

        • by Darinbob (1142669) on Friday March 22, 2013 @03:47PM (#43250495)

          You can take a handful of dollars and spend them just about anywhere in the US, plus many parts of the world. Retail stores, gas stations, even to give to the kid who mows your lawn. A flash drive with some bitcoins on it is essentially useless almost everywhere, and only slightly less useless on the internet (it's country of origin). If you have a handful of Euros, or Yen, or whatever, at least in the US you can go to any bank and have them exchanged. I don't know of any bank that will exchange bitcoins. I can take my visa or mastercard (eurocard) and use it most places in the world and pay in the local currency but get billed at home in USD (with an extra fee). I can not use a visa/mastercard to buy anything that takes only bitcoins.

          Bitcoins are pointless everywhere except for a very tiny number of places on the internet.

          Now the idea of a digital currency is not a bad idea by itself. However the currency should be tied to something tangible at the start, and not generated from nothing by "mining". The people pushing bitcoins the most are the speculators who have a significant chunk of mined bitcoins that they got for free, and they are hoping that the value goes up so that they can cash out. The people wanting a true digital currency are not necessarily bitcoin fans.

      • by Anonymous Coward on Friday March 22, 2013 @12:57PM (#43248033)

        If the average user can't exchange bitcoins for dollars, what good is it?

        Finally someone gets it, and explains why the EU is failing. All those people earning and spending euros, never converting them to dollars, wasting their time, getting nothing out of it. Don't they understand? If they don't convert to dollars, they're useless. Fortunately for the euro, they can convert to dollars, but so few europeans take advantage of this to validate to the euro. Thus, it never gains legitimacy.

      • by Afty0r (263037)

        If the average user can't exchange bitcoins for dollars, what good is it?

        Then the average user exchanges their bitcoin for a currency other than US Dollars?

    • Re: (Score:2, Funny)

      by Anonymous Coward

      Bitcoin works? Here I thought it was just good for giving you heatstroke, buying child porn or drugs, and breaking when there are more than about 70,000 transactions across the network per day (compared to Visa's 300 million). The currency of the future, ladies and gentlemen!

      Nota bene: I would have mentioned buying slim jims and ramen, but the self-made captains of industry running Bitmunchies weren't able to turn enough of a profit and shut down. Speaking of Bitcoin businesses, how's Roger Ver's Bitcoin st

    • by jandrese (485) <kensama@vt.edu> on Friday March 22, 2013 @12:42PM (#43247839) Homepage Journal
      The regulation is clearly going to happen at MtGox or any other place that exchanges bitcoins for USD. Once you are sending $10,000 USD to someone, the money laundering provisions apply. This should work for as long as businesses don't accept bitcoins directly, which is still mostly the case. There are a small number of businesses that will deal directly in bitcoins, but not enough that you could spend $10,000 on them reasonably yet.
      • by Nerdfest (867930)

        Can't businesses accept any amount of cash without declaring it, or are they required to declare that as well? I assumed most of these rules only applied when you tried to put the money in a bank, etc.

        • ehhh you are supposed to declare it. Many don't. But if you get caught you have serious issues!

        • by hedwards (940851) on Friday March 22, 2013 @01:07PM (#43248181)

          They don't have to, but if you go into a dealership and try to buy a new car with cash, they're probably going to see that as suspicious. Very, very few people pay cash in the literal sense for a vehicle, those who do have the money will usually pay by cash, because carrying around $24k in unrefundable currency is pretty risky. Not to mention a real PITA to count and carry.

          I used to get paid monthly in cash at a job I worked, and the 6500 would be a stack of hundreds about 2" high IIRC.

      • Even if businesses accept bitcoins directly, if they accept $10,000 worth of bitcoins in a single transaction this ruling is that they are required to report it just as they would be required to report it if they accepted USD cash.
        • by h4rr4r (612664)

          Or if they accept that amount in several transactions too close together. In fact that flags the transactions as even more suspicious and you have to fill out even more paperwork.

      • by Hentes (2461350)

        The problem with using bitcoins directly is that in that case you have to keep a large amount of your wealth in a very volatile currency.

      • Re:They don't get it (Score:5, Informative)

        by Ghostworks (991012) on Friday March 22, 2013 @01:44PM (#43248719)

        First, a small point: the laws apply to ALL transactions. The laws for MANDATORY reporting are at $10,000. If a financial institution suspects something weird -- which can mean a $9,999 transaction, 100 transactions of $100 each, a $5000 transaction where a teller noticed the customer also has another $5,000 in cash that he's not doing anything with yet, or a transaction where a customer said, "oh, wait, let me take that cash back and deposit a little less so I am below the $10,000 mandatory reporting limit" -- then they can, should, and probably will still file a report. This applies at banks, airports*, and numerous other places.

        * Side note: ever wonder why you can't travel with more than $10,000 cash? Well, you can. Ever wonder why some people act like you can't? Because it means paperwork. It's perfectly legal to walk through an airport with $10,000 and say, "I'm going to Las Vegas to bet the farm." It just means at some point customs, your bank, and the casino cashier will have forms to sign saying they saw $10,000. Unless you actually are driving to the Nevada desert for a drug deal, it's really no skin off your back.

        Second, I'm going to make this an, "I told you so," to posters on previous threads who seemed to believe that U.S. money laundering laws only applied to U.S. currency. It's most easily enforced at large, brick and mortar companies actually doling out greenbacks, but it's applicable always and everywhere something is a currency. If enough people were in a mood to transfer all of their cash in to WoW gold pieces, it would apply. It applies equally to Americans and in American jurisdictions to: U.S. dollars, mostly-defunct financial instruments like Bank promissory notes, to proxies like casino chips (and WoW gp), and non-federal currencies like Ithaca Hours [wikipedia.org], Chinese Yuan, and BitCoins.

        Third, on a larger scale, let this be a reminder that there is no "cyberspace". The internet is not something apart from the rest of the world. The internet is just something the whole world is "doing" right now. There is no cybercrime, just crime. There is no cyberlaw, only law. The internet is not regulated differently than any other aspect of our lives, except that special provisions are necessary to disambiguate jurisdiction and to enable law enforcement to cope with the realities of the situation, much in the way "wire fraud" was created as a federal crime to allow enforcement agencies to cope with the jurisdictional questions of a crime committed in one state by a perpetrator in another. The internet is not special. All laws still apply.

    • Bit Coin works even if there are no "firms" to issue or exchange. Therefore, there is no one to regulate.

      On the contrary. Just because there is no one 'issuing' or 'exchanging' Bitcoins doesn't mean that businesses and individuals using Bitcoins can't be regulated. Like MtGox and the other Bitcoin exchanges, or companies that accept Bitcoins in lieu of US dollars for goods and services.

      In some ways, this may also pave the way for wider acceptance of Bitcoins because more traditional companies are wary of

      • by cayenne8 (626475) on Friday March 22, 2013 @12:53PM (#43247993) Homepage Journal
        But why SHOULD it be regulated?

        For that matter, WTF should the US govt be notified if I do any transaction over $10K in cash, bitcoins or barter??

        How did we let it become the govts business what we do with our money?

        • Re: (Score:2, Informative)

          by Anonymous Coward

          To fight crime, but if you want to live in a country that corruption has overrun you can just go to mexico.
          The funny thing is that I'm sure you are against corrupt politicians, but it's much easier to just ignore consequences of what you want.

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      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 bit

      • by h4rr4r (612664)

        Person to person transactions are still regulated. You might not report them like you are supposed to, but when you get caught it will be a big deal.

    • by interkin3tic (1469267) on Friday March 22, 2013 @12:56PM (#43248029)
      I suspect you are the one who doesn't get it. Government makes demands. If those demands aren't met, aren't countered through an internal process (like voting the pols who made those demands out), or if those demands aren't bluffs, there's an escalation. Eventually, force will be used.

      There are people to regulate. The government will identify them if the politicians, lobbyists, and special interests are determined enough. I'm not sure if they are. How many transactions over $10,000 in value are being done with bitcoins (the minimum for these rules applying)? I didn't read TFA too closely, but I couldn't see any estimates.

      Many slashdotters may disagree that the government isn't serious about stopping bitcoin use, but hear me out. Banks and law enforcement may have made statements "worrying" about it, but that doesn't mean they see it as a real threat due to how few people use bitcoins. Bitcoin proponents love to think that what they're doing will be a revolution, but bitcoins seem to be losing ground (if they had any to begin with.) I can't imagine banks or law enforcement spending much capital on a problem that is solving itself. The "I want taxes" bureaucrats aren't likely to pursue it either for the same reasons. They don't, after all, usually audit teenage babysitters for tax evasion. And I'd wager babysitting is a more lucrative economy than anything happening on bitcoin.

      Anyway, the target here probably isn't bitcoins, it's probably the other alternative currency mentioned in the article: corporations with virtual currency. Amazon coins. There's obviously someone to regulate there.

      Forget about bitcoins. They're not the story here despite the headline. Amazon or various other entities attempting to avoid sales taxes IS.
      • by Trepidity (597)

        Anyway, the target here probably isn't bitcoins, it's probably the other alternative currency mentioned in the article: corporations with virtual currency. Amazon coins. There's obviously someone to regulate there.

        I agree bitcoins aren't the real target. In addition to the corporation-tied virtual currencies you mention, online game currencies are of interest to law enforcement recently because they've been used to launder money. It's quite straightforward: you buy a bunch of virtual gold with USD, then you

  • Solution (and business decision): Have the exchanges in tax heavens. Make all transfers bitcoin-only, until you really need to cash out. Not an easy thing to solve for the tax guys, but maybe this time they will bother do something that can eventually be used to prevent the tax evasion and money laundering happening until now with regular currencies.
  • ...now it will be an also ran. Oh wait, it already is.

  • by Anonymous Coward on Friday March 22, 2013 @12:30PM (#43247691)

    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?

  • by Xemu (50595) on Friday March 22, 2013 @12:33PM (#43247731) Homepage

    They will use this law to strike against Silk Road.

    Remember, Capone was convicted on federal charges of tax evasion.

  • Pot...kettle... (Score:5, Insightful)

    by ProZachar (410739) on Friday March 22, 2013 @12:34PM (#43247755) Homepage

    "I think it's inevitable that just like you have U.S. dollars used by thieves and criminals..."

    Unfortunately, the worst thieves and criminals (the government and the banks that have bought the government) will be the ones doing the regulating.

  • by Uberbah (647458) on Friday March 22, 2013 @12:37PM (#43247785)

    Same as when banks started having to report transactions of a few thousand dollars to the feds, because it could be "money laundering". If it's not the mob, it's terrahrists or pedos.

    Same shit from both parties, different day.

    • Re: (Score:3, Interesting)

      by ADRA (37398)

      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: (Score:2, Insightful)

        by Anonymous Coward

        Get a grip and reality and tell me your GOVERNMENT is the bigger threat than the gang bangers around the corner.

        When I pass through airports, I can honestly say that I am more afraid of the anti-terrorism and customs officials than I am of the terrorists.

      • by mpeskett (1221084)

        The problem isn't necessarily the government of today, in it's current state. The problem is that granting any government greater power than it already has is an action that's very difficult to undo; that power is unlikely to be relinquished without a protracted fight. That means you're not just trusting the government of today not to abuse whatever you allow them to do, but also every conceivable future government.

        If you want to truly evaluate whether the government should be permitted to do a thing, fir

    • by bobbied (2522392)

      Same as when banks started having to report transactions of a few thousand dollars to the feds, because it could be "money laundering".

      And you would expect something different for BitCoin over Western Union money orders?

      Nothing is really different here. If you don't use some institution that is subject to the reporting rules or physically move money over national boundaries, you are free to make transactions anyway you choose. Want to spend $100K as stacks of $20's and buy something you can (assuming somebody is willing to sell what you want to buy). Same with BitCoin.

      What's really changing is that when you buy or sell BitCoin from a

  • Why do I always get a slight shiver up my back when people say things like that...?

  • Booo! (Score:2, Insightful)

    by Anonymous Coward

    Pry them out from my cold hard encryped grasp, if you can.
    Satanic usery worshipping asshats.

  • by Mabhatter (126906) on Friday March 22, 2013 @12:42PM (#43247845)

    Yea! Bitcoin is growing up! That means enough people are using it that the government is noticing. And of course the first thing the government does to show its appreciation is to start regulating it. Did they at least get a "Baby's first regulation" card?

  • Much better article (Score:5, Informative)

    by SteveFoerster (136027) <.steve. .at. .stevefoerster.com.> on Friday March 22, 2013 @12:49PM (#43247927) Homepage

    For the few, the proud, the article readers: Pelle Braendgaard of PayGlobe wrote a much better article on the same topic [payglo.be].

  • Inline stock quote (Score:5, Insightful)

    by necro81 (917438) on Friday March 22, 2013 @12:50PM (#43247935) Journal

    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%

    Sigh. Inline, updating stock quotes in business and finance articles are annoying enough in their own context. When taken out of that context by a lazy and sloppy copy-paste, as had happened with this article summary, is just plain disappointing. Does nobody bother to copy-edit these things before they go live? I thought this was /., not reddit.

  • by moeinvt (851793) on Friday March 22, 2013 @12:53PM (#43247975)

    Money laundering? BS. If they cared about money laundering then they'd go after the bankers who are laundering millions of dollars in drug money for the cartels.

    What this is really about is a banker-government that will do anything and everything possible to prevent alternatives to their fiat + fractional reserve monopoly on money. These parasites absolutely can't have us serfs using a money supply which they can't control and manipulate in order to enrich themselves at the expense of everyone else.

    "Let me issue and control a nation's money and I care not who writes the laws." Mayer Amschel Rothschild

  • helping trigger this week's move from the Treasury's Financial Crimes Enforcement Network, or FinCen." to what?
    oh you meant "by":
    helping trigger this week's move by the Treasury's Financial Crimes Enforcement Network, or FinCen."

  • The bubble is obvious: look at the 2013 BTC/USD chart [bitcoincharts.com].

    Despite periodic "corrections", the price is still continuing to rise precipitously. The volatility is insane, but how viable is it that the price on 1 Jan 2013 was 1 BTC/~$15, and now it's trading for ~$70? The value has more than quadrupled in the 81 days so far in 2013. If the present bubble is extrapolated that represents roughly a 103,000% APY [google.com]; clearly, that growth is unsustainable.

    So... is anyone selling put options [wikipedia.org] on BTC?

    Seems like purchasing a f

    • Re: (Score:2, Interesting)

      by Spy Handler (822350)

      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?

    • by shaitand (626655)
      Quite viable. The price increase initially came as a result of the reward for mining being halved by the network so the supply of Bitcoin was halved. Additionally, ASIC miners are dramatically faster and slow to trickle in. These result in a dramatic increase in mining difficulty. That means the output of most miners dropped dramatically and the prices they must charge to cover their costs goes up. Miners don't just unlock new currency units, they process Bitcoin transactions and assure the coin used is not
  • And watch the value of bitcoins collapse if/when this goes into effect.

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