Treasury Department undersecretary says bitcoin regulation fine for now

Cash is still the predominant currency used for illicit activity

Especially following the public implosion of e-currency exchange Mt.Gox, the buzz around bitcoin has recently been less than positive. But this week regulators chimed in on the crypto-currency, saying that they would not seek to regulate it further until it becomes more commonly used for illegal activities.

In a briefing on March 18, the Treasury Department’s undersecretary for terrorism and financial intelligence, David Cohen, said that money laundering was not currently a widespread issue for the bitcoin, nor was it the preferred method of payment for criminal or terrorist activity.

During the speech Cohen said, “Terrorists generally need ‘real’ currency, not virtual currency, to pay their expenses -– such as salaries, bribes, weapons, travel, and safe houses,” Bloomberg reported. The same, Cohen said, held true for those looking to get around sanctions.

Cohen also denied claims that additional regulation of the virtual currency would stifle innovation in the U.S., saying that more transparency and oversight could have the potential to legitimize and stabilize currencies like bitcoin.

Multiple nations are trying to decide how to treat digital currencies like bitcoin, as they’re currently risky for consumers, subject to extreme price fluctuations based on subtle changes in the market, and “grossly inefficient,” according to Cohen.

New York State is leading the charge as it relates to tighter oversight on bitcoin, holding multiple hearings on legitimizing the currency earlier this year, and responding to the bankruptcy of Mt. Gox with a call for more consumer protection.

Still, even without being subject to regulation, the use of bitcoin continues to expand. With news today that several prominent investment groups have official entered into the digital currency arena, it may only be a matter of time before bitcoin makes it into the financial limelight, and really requires more regulation.

 

For more on the confluence of digital currency and the law check out these stories:

Debate about bitcoin regulation goes global

Bitcoin exchange Mt. Gox files for bankruptcy following data breach

New York official to introduce virtual currency regulation

Associate Editor

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Chris DiMarco

Chris DiMarco, Associate Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

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