US Treasury presents guidelines to virtual money transmitters

Mar 25, 2013 by Nancy Owano weblog
Bitcoin

(Phys.org) —Money launderers thinking virtual currency provides an easy way to towel-off have had a rude awakening this month with the U.S. Treasury announcing that virtual currencies, like real currencies, must abide by the same rules regarding what's legal and illegal.

The new currency traffic rules clarify virtual currency definitions. They are intended to ensure that businesses engaged in virtual currencies are aware of their regulatory responsibilities. FinCEN stands for Financial Crimes Enforcement Network, which is an arm of the Treasury Department. FinCEN is intended to support the safeguarding of the U.S. financial system from abuse by criminals and money laundering.

The announcement relayed the news that standard federal banking rules aimed at suspicious dollar transfers also apply to firms that issue or exchange the kind of money that stands free of any governments and exists only online—virtual currencies.

The guidline presentation does not mean that virtual currency is outlawed but that virtual currencies will be open to the same examination applied to "real" money. Specifically, any firms that issue or exchange online cash will need to get in step with requirements and will need to report transactions exceeding $10,000. Virtual currency is a mode of exchange that operates like currency but lacks legal tender status in many jurisdictions.

Issued March 18, the notice was titled "Application of FinCEN's Regulations to Persons Adminstering, Exchanging, or Using Virtual Currencies," and it said that the FinCEN was issuing this "interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act ['BSA'] to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies."

The Bank Secrecy Act is a comprehensive federal anti-money laundering statute. The announcement follows concerns over the possibility that Internet cash models may provide safe haven for some illicit activities, where criminals may be drawn to doing business in virtual currencies so that they avoid being traced.

With this month's announcement, virtual-currency watchers have frequently referred to Bitcoin, a digital peer-to-peer currency created in 2009. Although it is not the only act in town offering virtual currency alternatives to real cash, Bitcoin is popular and widely used as an alternative model not backed by a central bank or controlled by a central administrator.

Recently, there was news from Canada that a home-owner in Alberta listed his two-bedroom residence for $395,000 and was accepting bitcoins as a portion of the purchase price or covering the entire purchase price. In Spain, a BGR report indicated residents of Spain were interested in Bitcoin to protect their savings. According to a posting earlier this month, Bitcoin-related apps started spiking on the Spanish iPhone market.

The Geekosystem take on the news and its ramifications for Bitcoin is pragmatic. The comment from the site was that "Just because some criminals use Bitcoin, does not mean it's a criminal empire." The rules will just make it tougher for the use of Bitcoin for illicit ends. Besides, "having the Treasury department regulating it should make supporters of happy to see that it's getting a level of legitimacy it didn't have before."

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dogbert
3.5 / 5 (10) Mar 25, 2013
How does the U.S. Treasury department regulate currencies which are not issued by U.S. entities and/or are not transacted by entities operating in the U.S.?

Or how is a determination made that a transaction is subject to U.S. Treasury jurisdiction?
Arcbird
2.7 / 5 (9) Mar 25, 2013
It's funny they talk about protecting the fanancial system from abuse by criminals when the money lending business in itself have been criminal for so many years.
Parsec
3 / 5 (6) Mar 25, 2013
So lets get this straight. The US government wants me to report when more than 10,000 gold transfers hands in my WOW game?

That's like... WOW!
Bob_Kob
4.2 / 5 (5) Mar 25, 2013
I thought there was no central system with bitcoin, and thus almost impossible to trace or regulate?
Magy
3.7 / 5 (7) Mar 25, 2013
dogbert - they can't. there is only fool wish to regulate and control it. if you will go deeper in bitcoin specification, you'll realize it's impossible to charge tax from btc transaction - unless u.s. government create some trade website with fees for each transaction, but will be single person on this world, who want to use it? :D
The problem of u.s. government is, that they want control everything. EVERYTHING. They talking about freedom, but that's exactly, what they fear of mostly. And BTC is pure freedom, out of their control. That's why they hate it.
VENDItardE
2.2 / 5 (10) Mar 25, 2013
another reach by the Obamocracy. we think it should be regulated so we are going to do it whether it is legal or not for us to do so.
PPihkala
4.2 / 5 (5) Mar 25, 2013
So lets get this straight. The US government wants me to report when more than 10,000 gold transfers hands in my WOW game?

They want to know about virtual transfers whose dollar equivalent amount is 10000 or more. I bet 10000 gold in WOW is valued much less than USD 10000.
kochevnik
1 / 5 (3) Mar 25, 2013
LOL cybercurrency is the REPLACEMENT for the FED banksters and their war profiteering narcopuppets. They had their fun with 9/11 but since then the world has been scrambling to replace these psychopaths with MATHS

Cyberspace > USA meatspace
alq131
3 / 5 (4) Mar 25, 2013
But who sets the exchange rate for $ to WOW gold? Do I also have to report $10K equivalent if trade potatoes for carrots? Currency is just a commonly agreed to exchange for barter...so does a Post-it note for $10k worth of potatoes need to be reported if "money" never changes hands? so much for freedom.
Arcbird
1 / 5 (2) Mar 25, 2013
LOL cybercurrency is the REPLACEMENT for the FED banksters and their war profiteering narcopuppets. They had their fun with 9/11 but since then the world has been scrambling to replace these psychopaths with MATHS

Cyberspace > USA meatspace


They've been doing stuff since a lot further back than 9/11, what do you mean with MATHS?
Shootist
1 / 5 (3) Mar 25, 2013
It's funny they talk about protecting the fanancial system from abuse by criminals when the money lending business in itself have been criminal for so many years.


The stealing of the stolen continues.

(no. I don't believe all property is theft, but their are really, really, smart idiots who do).
StanTaffle
2.5 / 5 (2) Mar 25, 2013
FinCEN: Financial Crimes Enforcement Network. So this will be a network enforcing financial crimes, not financial laws? That sounds plausible. I propose a Financial Crimes Avoidance Network, and/or FinCENAN.
Lurker2358
2 / 5 (3) Mar 25, 2013
But who sets the exchange rate for $ to WOW gold? Do I also have to report $10K equivalent if trade potatoes for carrots? Currency is just a commonly agreed to exchange for barter...so does a Post-it note for $10k worth of potatoes need to be reported if "money" never changes hands? so much for freedom.


You are supposed to report profits from barter transactions on your tax return anyway (i.e. how much you gained vs the fair market value). It's been that way forever. Almost nobody reports it for real though.

If you play WoW and you sell "Gold" or an item for real money, you are supposed to report the money as income on your tax return.
kochevnik
2 / 5 (3) Mar 26, 2013
LOL cybercurrency is the REPLACEMENT for the FED banksters and their war profiteering narcopuppets. They had their fun with 9/11 but since then the world has been scrambling to replace these psychopaths with MATHS

Cyberspace > USA meatspace


They've been doing stuff since a lot further back than 9/11, what do you mean with MATHS?
Bitcoin proves that a decentralized currency can be built upon maths, and doesn't require zionist warmongering banksters or any humans at all to manage

The only problem I can see with any currency is the problem of hoarding. This can be countered with positive interest rate return for lenders. A real currency will not suffer negative or near zero interest rates because of scarcity. The FED funny money has no scarcity. This will cause massive inflation with the world dumps the US dollar soon

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