US studying risk from online payment providers

Jun 03, 2013
The United States is studying the potential risk from online payment mechanisms like PayPal and Bitcoin, a top US Federal Reserve official told an international conference.

The United States is studying the potential risk from online payment mechanisms like PayPal and Bitcoin, a top US Federal Reserve official told an international conference on Monday.

Some bankers have expressed worries that newer players in the online marketplace could have negative implications for the financial system.

"We have been talking... with banking organisations over the last year or two, trying more carefully to understand what the concerns are with these new payment mechanisms," Federal Reserve Vice Chair Janet Yellen said.

But she denied the widespread view that such players operate completely unregulated, saying the has a stronger regulatory environment than many are aware of, especially in the area of consumer protection.

"In point of fact, at least in the United States, there are regulations that apply to PayPal and other payment providers," she told the annual International Monetary Conference in China's financial hub of Shanghai.

is the online payments arm of US Internet retail giant .

"But that said, this is very much on our radar screen and we are carefully trying to identify where the risks are," Yellen added.

Last month, US authorities seized the accounts of one Bitcoin digital exchange operator, Mutum Sigillum LCC, claiming it was functioning as an "unlicensed money service business".

Bitcoins were launched in 2009 in the wake of the by an anonymous programmer who wanted to create a currency independent of any central bank or financial institution.

Some officials fear the can be used by criminals or terrorists, or could be vulnerable to hackers.

The United States last month launched a money laundering probe against a digital currency operator, Costa Rica-based Liberty Reserve, which allegedly handled huge amounts of money outside the control of national governments.

Explore further: US warns shops to watch for customer data hacking

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rwinners
not rated yet Jun 03, 2013
Our government is paranoid. If it behaved in a fair an rational way, it (and it's participants) should never have to worry... but it does. The US government lives by taking a percentage of each and every transaction occurring within it's boundaries. Sometimes those "takings" are visible as direct taxes and sometimes they are quite invisible. When the government taxes a person's wages, that is direct.... but the other side of that coin... those taxes apply to everything that person might have produced during the previous year.... and the parts of that production that were produced by another... and that other's wages were also taxed.\
Talk about your Ponzi Scheme!