Bitcoin Regulatory Update- 01/17/14
On Tuesday, January 14, Wells Fargo’s anti-money laundering unit organized a meeting in San Francisco to discuss “rules of engagement” for Bitcoin. Reportedly in attendance were representatives from other major banks, federal and state regulators, crypto currency experts and other industry representatives. As Bitcoin continues to grow, the meeting was an unusually public result of the regulatory vacuum surrounding its adoption in the United States. What the attendees discussed will doubtless be disclosed in the days to come, but what is certain is that a wide variety of stakeholders have a vested interest in seeing Bitcoin succeed and the US government seems inclined at present to allow that to happen.
Other Recent Regulatory Developments:
Last week, Senator Thomas Carper, Chairman of the Senate Homeland Security and Governmental Affairs Committee stated during an interview with CNBC that “federal regulators and law enforcement agencies don’t need new laws to tamp down on the more seedy uses of Bitcoin and other virtual currencies.” Carper went on to suggest that he and his colleagues would wait to “see what kind of good can flow from [Bitcoin].” This sentiment was echoed recently in a letter to Congress by Federal Reserve Board chairman Ben Bernanke, who said that Bitcoin “may hold long term promise.”
The IRS issues a list at the beginning of each year of current tax issues for which it will not grant letter rulings. These issues are currently working their way through the courts, are under study or are pending legislative action. Though the IRS has publicly claimed to be working on guidance for virtual currencies, including Bitcoin, the 2014 list makes no mention of them. This is curious. Either it means that the IRS considers Bitcoin’s regulatory future to be so certain that it hardly merits a mention, or so uncertain that the agency has no idea yet what to do about it. Alternatively, Bitcoin could still be too small for the IRS to expend limited resources worrying about. The proposed IRS budget for 2014 returns the agency to funding levels last seen half a decade ago, before passage of the Affordable Care Act saddled it with an enormous new mandate.
After a brief hiatus, Mike Caldwell’s Utah-based Casascius Coin mint is back in operation. Casascius temporarily stopped accepting new orders last month in reaction to FinCEN guidance that suggested that it might be considered a money service business. The company no longer sells loaded coins through the mail, only blanks that customers must load themselves. Caldwell believes this puts him in the category of an online retailer, rather than a money service business. Customers can still purchase loaded coins in person, which gives Caldwell the opportunity to “know his customer” in accordance with anti-money laundering laws and also prevents him from running afoul of money transfer rules beyond his state of operation.
Last, but certainly not least, US taxpayers now have the option of paying taxes in Bitcoin through snapCard, a two-month-old startup located in San Mateo, California. Third party payment providers that enable taxpayers to remit payments using credit cards have been around for some time, but not until recently has a company done this with Bitcoin. SnapCard states that they will soon offer Bitcoin payments for other bills in much the same way as conventional banks. However, with banks contemplating moving into Bitcoin, snapCard has its work cut out for it.
Post image courtesy of Ravenbit, LLC.