Feds Continue to Weigh Virtual Currency’s Pros and Cons (Nov. 19, 2013)
“Virtual currencies have captured the imagination of some, struck fear among others and confused the heck out of many of us.” So said Sen. Tom Carper (D-Del.) yesterday during a hearing on virtual currencies, thus encapsulating the spectrum of opinion surrounding decentralized digital money, such as Bitcoin, which has garnered worldwide attention in recent months.
“It’s clear that this technology presents some new and unique risks, but with it, there are clearly some who believe it has great potential,” said Carper, who is chairman of the Homeland Security and Governmental Affairs Committee, which held the hearing, “Beyond Silk Road—Potential Threats, Risks and Promises of Virtual Currency.” Silk Road refers to the Website that was shut down last month for allegedly enabling users to purchase illegal drugs and launder money using bitcoins.
The hearing included testimony from members of the U.S. Departments of Justice and the Treasury, as well as a representative from the nonprofit organization Bitcoin Foundation, among others. Carper said the hearing is just a part of fact-finding efforts, and that legislators and federal agencies will continue to explore virtual currency.
The Financial Crimes Enforcement Network “seeks to understand the specific attributes that make virtual currency vulnerable to illicit use, so that we can both employ a smart regulatory approach and encourage industry to develop mitigating features in its products,” said FinCEN Director Jennifer Shasky-Calvery. Last March, the agency issued clarification of its stance on people and entities engaged in the use, exchange and administration of virtual currencies.
“The decision to bring virtual currency within the scope of our regulatory framework should be viewed by those who respect and obey the basic rule of law as a positive development for this sector. It recognizes the innovation virtual currencies provide, and the benefits they might offer society,” Shasky-Calvery said.
Bitcoin enables global financial inclusion, enhanced personal liberty and improved financial privacy, according to Patrick Murck, general counsel, Bitcoin Foundation. “Whether it brings people into existing financial services systems, or if it secures people’s wealth better outside of formal systems, we believe Bitcoin has tremendous potential to improve the capacity of people around the world to build and store wealth,” Murck told the committee. “That greater access to wealth may produce improved outcomes in the area of food and nutrition, health and longevity, education and child development, family structure, protection of civil and political rights, and even political stability and global security.”