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US Senate committee initiates inquiry into bitcoin and virtual currencies

Wednesday 14th, August 2013 / 11:30

A US Senate committee has begun an inquiry into bitcoin and virtual currency, pressing financial regulators and law enforcement agencies for further information and guidance.

In a letter sent on Monday Aug 12, the US Senate Committee on Homeland Security & Governmental Affairs asked the Department of Homeland Security (DHS) for information on any policies, guidance, plans and strategies they have that pertain to virtual currencies.

The letter (embedded below) was sent to the secretary of the DHS, The Honorable Janet Napolitano, from the Senate committee chairman, Democrat Thomas R. Carper and Republican Ranking Member Tom A. Coburn.

It outlines how virtual currencies have caught the attention of law enforcement, the federal government, businesses and the financial sector over the past few months. The letter also refers to the decentralised nature of virtual currencies, the speed with which payments can be made, the potentially profitable investments that can be made and how their potentially anonymous nature can attract criminals – citing the recent Trendon Shavers Ponzi scheme as an example.

The letter references the Winklevoss twins’ S-1 filing for a bitcoin exchange-traded fund, the Government Accountability Office’s request for guidance from the  the Internal Revenue Service, and the DHS’ seizure of a bank account “connected with the largest virtual currency exchange” (Mt. Gox).

It also stresses that a balanced stance must be adopted: “As with all emerging technologies, the federal government must make sure that potential threats and risks are dealt with swiftly; however, we must also ensure that rash or uninformed actions don’t stifle a potentially valuable technology.”

The committee stated in its letter that it will be contacting additional offices and agencies in the DHS, and that the DHS will have to provide the requested information by August 30, 2013.

Politico reports that similar letters were also sent to the Department of Justice, the Federal Reserve, Department of Treasury, the Securities and Exchanges Commission, the Office of Management and Budget, and the Commodities Futures Trading Commission.

This letter closely follows the subpoenas in New York state. The stated intent of this move was to work with companies engaged in the bitcoin world to find out how to move the regulatory framework forward.

However, Patrick Murck, General Counsel for the Bitcoin Foundation told Ars Technica: “[The subpoena] is extremely broad and onerous. Everyone I’ve spoken with who received the subpoena is amazed at the scope of the document request. While the [Department of Financial Services] says they want to have a conversation with the industry, their actions speak the language of aggressive litigation. It appears that the burden is on the industry to negotiate a narrowing of the scope of NY’s request and shape a productive conversation.”

US Senate committee virtual currency letter

Image credit: Flickr / Larry1732

The post US Senate committee initiates inquiry into bitcoin and virtual currencies appeared first on CoinDesk.

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