N.Y. Looks to Tame ‘Wild West’ of Virtual Currencies (Aug. 14, 2013)
Aug. 14, 2013
Less than a week after a U.S. federal judge ruled that Bitcoin is real currency, New York State’s Department of Financial Services (DFS) announced it has launched an investigation into virtual currencies.
“The emergence of Bitcoin and other virtual currencies has presented a number of unique opportunities and challenges,” DFS Superintendent Benjamin Lawsky said in a memo this week. The DFS already has requested information from virtual currency firms.
“Building innovative platforms for conducting commerce can help improve the depth and breadth of our nation’s financial system,” Lawsky said. “However, we have also seen instances where the cloak of anonymity provided by virtual currencies has helped support dangerous criminal activity, such as drug smuggling, money laundering, gun running and child pornography.”
The country’s national security and the virtual currency industry could be threatened if virtual currencies remain a “virtual Wild West” for criminals, according to Lawsky. The benefits of any regulatory guidelines resulting from the investigation would be three-fold: build consumer confidence that the funds they entrust to virtual currency companies “will not get stuck in a digital black hole,” root out illegal activity, and facilitate transparency and accountability for investors who have shown an increasing interest in virtual currency firms, Lawsky said.
U.S. Magistrate Judge Amos L. Mazzant’s decision Aug. 8 that Bitcoin is a form of money was in connection with a charge by the U.S. Securities and Exchange Commission that Trendon Shavers allegedly defrauded investors of approximately $150,000 worth of bitcoins in a Ponzi scheme.