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Bitcoin Goes to Washington: Bitcoin and Money Laundering: 2014 Commerce, Justice, Science, and Related Agencies Appropriations Bill: Federal Bureau of Investigation

Op-ed - Bitcoin Goes to Washington: Bitcoin and Money Laundering: 2014 Commerce

Bitcoin Goes to Washington

Bitcoin and Money Laundering: 2014 Commerce, Justice, Science, and Related Agencies Appropriations Bill: Federal Bureau of InvestigationBy Brian Cohen and Adam B. LevineOn the heels of today’s news that the New York Department of Financial Services issued a Notice of Inquiry on Virtual Currencies and subpoenaed almost two dozen Bitcoin Companies, last week’s ruling in federal court, and the SEC’s recent action against the infamous Pirate40 (and consequently a Texas Federal Judge declaring “Bitcoin is a currency, or form of money”) and July’s DEA Bitcoin Asset Seizure, it seems Bitcoin is attracting more and more regulator attention in the US.According to a recent release, the US Legislature has taken an interest as well.The House of Representatives posted the 2014 Appropriations Bill for Commerce, Justice, Science and Related agencies which contains many things, but notably requests an FBI Briefing on the subject of Bitcoins and Money Laundering, to be available within 120 days of signing. On July 23, 2013, As Reported by the Appropriations Committee, Mr. Wolf submitted the following…:Text from Page 44 of the Bill:

Money laundering.—The Committee understands that Bitcoinsand other forms of peer-to-peer digital currency are a potential means for criminal, terrorist or other illegal organizations and individuals to illegally launder and transfer money. News reports indicate that Bitcoins may have been used to help finance the flight and activity of fugitives. The Committee directs the FBI, in consultation with the Department and other Federal partners, to provide a briefing no later 120 days after the enactment of this Act on the nature and scale of the risk posed by such ersatz currency, both in financing illegal enterprises and in undermining financial institutions. The briefing should describe the FBI efforts in the context of a coordinated Federal response to this challenge, and identify staffing and other resources devoted to this effort.

Text via Congress.govPDF via House.govThe cash-like nature of Cryptocurrencies such as Bitcoin seem to be fundamentally at odds with the identity-based financial systems we’ve used since the advent of the internet. What the bitcoin-using community sees as the advantages of Bitcoin; trustless and irrevocable transactions divorced of official identity. In another light this can be seen as enabling money laundering, consumer fraud and terrorism."It is natural for established industries and their representatives in the Senate to fear new and disruptive technologies.” explained Andreas M. Antopoulos, Expert on decentralized networks “As with the early Internet, there are those who only look at the empowering effects on criminals, rather than on the vast majority of people who can benefit enormously. It just takes time for the lawmakers and laws to catch up to the technology and adapt”Although its not entirely clear if the reference is to a United States fugitive or not, the neutral nature of Bitcoin makes this a very difficult issue to effectively address:“News reports indicate that Bitcoins may have been used to help finance the flight and activity of fugitives.”Most recently, Edward Snowden became a bitcoin-accepting persona-non-grata via Julian Assange’s Wikileaks.Jon Matonis Executive Director of the Bitcoin Foundation explained in his article on Forbes last year how Wikileaks began accepting Bitcoin in “WikiLeaks Bypasses Financial Blockade With Bitcoin”Wikileaks has received 3,786.53428743 BTCwhile the Journalistic Source Protection Defence Fund for Edward Snowden has received 28.1635503 BTCas of 8/12/2013 8:20 ESTDonations may not give the entire picture as Jon Matonis pointed out in his article that“…these amounts may be significantly higher, because it does not even include the individually-generated bitcoin addresses that WikiLeaks provides for donors upon request.”WikiLeaks began accepting Bitcoin more than two years ago on June 14th, 2011.What does this mean for Bitcoin? Attention from ever-more arms of governments around the world on the one hand lends credibility to the concept of cryptocurrency. After all, if it wasn’t a powerful concept governments wouldn’t lower themselves, devoting time and resources to address it. On the other hand, it’s another step down the path towards clarity which can be either good or bad. For all its benefits, Cryptocurrency may be simply too dangerous to keep in the hands of its current users. Stay tuned for further developments.This article was originally published on Let's Talk Bitcoin! and is in regards to the House Bill. To see whats going on in the Senate, see Bitcoin Shakes Up Congress by Bitcoin Magazine's Elizabeth Ploshay.