Bitcoin To Be Regulated Under US Money Laundering Laws

Newsubmitter davek writes with news that the U.S. will be applying money-laundering laws to Bitcoin and other 'virtual currencies.' "The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. WU +0.17% They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000. Moreover, firms that receive legal tender in exchange for online currencies or anyone conducting a transaction on someone else's behalf would be subject to new scrutiny, said proponents of Internet currencies. 'I think it's inevitable that just like you have U.S. dollars used by thieves and criminals, it's sadly inevitable you will have criminals use a virtual currency. We want to work with authorities,' said Jeff Garzik, a Bitcoin developer. Still, law enforcement, regulators and financial institution have expressed worries about the hard-to-trace attributes of virtual currencies, helping trigger this week's move from the Treasury's Financial Crimes Enforcement Network, or FinCen."

Comments

They don't get it

[lalena]

Bit Coin works even if there are no "firms" to issue or exchange. Therefore, there is no one to regulate.

Re:They don't get it

[Anonymous Coward]

They regulate entities that exchange bitcoins for dollars.

If the average user can't exchange bitcoins for dollars, what good is it?

Re:They don't get it

[jandrese]

The regulation is clearly going to happen at MtGox or any other place that exchanges bitcoins for USD. Once you are sending $10,000 USD to someone, the money laundering provisions apply. This should work for as long as businesses don't accept bitcoins directly, which is still mostly the case. There are a small number of businesses that will deal directly in bitcoins, but not enough that you could spend $10,000 on them reasonably yet.

Re:They don't get it

[cayenne8]

But why SHOULD it be regulated?

For that matter, WTF should the US govt be notified if I do any transaction over $10K in cash, bitcoins or barter??

How did we let it become the govts business what we do with our money?

Re:They don't get it

[interkin3tic]

I suspect you are the one who doesn't get it. Government makes demands. If those demands aren't met, aren't countered through an internal process (like voting the pols who made those demands out), or if those demands aren't bluffs, there's an escalation. Eventually, force will be used.

There are people to regulate. The government will identify them if the politicians, lobbyists, and special interests are determined enough. I'm not sure if they are. How many transactions over $10,000 in value are being done with bitcoins (the minimum for these rules applying)? I didn't read TFA too closely, but I couldn't see any estimates.

Many slashdotters may disagree that the government isn't serious about stopping bitcoin use, but hear me out. Banks and law enforcement may have made statements "worrying" about it, but that doesn't mean they see it as a real threat due to how few people use bitcoins. Bitcoin proponents love to think that what they're doing will be a revolution, but bitcoins seem to be losing ground (if they had any to begin with.) I can't imagine banks or law enforcement spending much capital on a problem that is solving itself. The "I want taxes" bureaucrats aren't likely to pursue it either for the same reasons. They don't, after all, usually audit teenage babysitters for tax evasion. And I'd wager babysitting is a more lucrative economy than anything happening on bitcoin.

Anyway, the target here probably isn't bitcoins, it's probably the other alternative currency mentioned in the article: corporations with virtual currency. Amazon coins. There's obviously someone to regulate there.

Forget about bitcoins. They're not the story here despite the headline. Amazon or various other entities attempting to avoid sales taxes IS.

Re:They don't get it

[Anonymous Coward]

If the average user can't exchange bitcoins for dollars, what good is it?

Finally someone gets it, and explains why the EU is failing. All those people earning and spending euros, never converting them to dollars, wasting their time, getting nothing out of it. Don't they understand? If they don't convert to dollars, they're useless. Fortunately for the euro, they can convert to dollars, but so few europeans take advantage of this to validate to the euro. Thus, it never gains legitimacy.

Re:They don't get it

[h4rr4r]

I call bullshit on that.
Amazon does not take bitcoin. Someone is converting that to pay amazon USD. They will regulate the one doing the conversion.

Re:They don't get it

[hedwards]

Not really, USD are taken by anybody in the US that lends money as well as for taxes. BTC are basically just useful by a small number of people that aren't very good at math. The rest of us stick to currency and barter of things that actually exist.

Now, if BTC was a mandatory option for payment and was likely to continue that way into the future, then it would be a closer analogy. But, even there with the fixed maximum supply and the curve at which they're being introduced, being what they are, even then it would be a stretch.

Re:They don't get it

[SerpentMage]

They will comply because if they don't it means that they can never have a US account, ask for US dollars, trade US equities, etc, etc, etc... If you are willing to 100% forgo every and any tie to the US, go for it! The US is even for us foreigners a part of our daily lives, directly or indirectly.

Re:They don't get it

[h4rr4r]

The Euro is another currency that millions of people accept and pay taxes with. Bitcoins are not.

Re:They don't get it

[Anonymous Coward]

Yes, BitPay are converting buttcoin to USD and will be the ones regulated. Shouldn't be too big a deal; presumably they already have customers' addresses so they can ship stuff to them.

Re:They don't get it

[serviscope_minor]

The Euro is another currency that millions of people accept and pay taxes with

Except the Greeks!

Re:They don't get it

[Ghostworks]

First, a small point: the laws apply to ALL transactions. The laws for MANDATORY reporting are at $10,000. If a financial institution suspects something weird -- which can mean a $9,999 transaction, 100 transactions of $100 each, a $5000 transaction where a teller noticed the customer also has another $5,000 in cash that he's not doing anything with yet, or a transaction where a customer said, "oh, wait, let me take that cash back and deposit a little less so I am below the $10,000 mandatory reporting limit" -- then they can, should, and probably will still file a report. This applies at banks, airports*, and numerous other places.

* Side note: ever wonder why you can't travel with more than $10,000 cash? Well, you can. Ever wonder why some people act like you can't? Because it means paperwork. It's perfectly legal to walk through an airport with $10,000 and say, "I'm going to Las Vegas to bet the farm." It just means at some point customs, your bank, and the casino cashier will have forms to sign saying they saw $10,000. Unless you actually are driving to the Nevada desert for a drug deal, it's really no skin off your back.

Second, I'm going to make this an, "I told you so," to posters on previous threads who seemed to believe that U.S. money laundering laws only applied to U.S. currency. It's most easily enforced at large, brick and mortar companies actually doling out greenbacks, but it's applicable always and everywhere something is a currency. If enough people were in a mood to transfer all of their cash in to WoW gold pieces, it would apply. It applies equally to Americans and in American jurisdictions to: U.S. dollars, mostly-defunct financial instruments like Bank promissory notes, to proxies like casino chips (and WoW gp), and non-federal currencies like Ithaca Hours, Chinese Yuan, and BitCoins.

Third, on a larger scale, let this be a reminder that there is no "cyberspace". The internet is not something apart from the rest of the world. The internet is just something the whole world is "doing" right now. There is no cybercrime, just crime. There is no cyberlaw, only law. The internet is not regulated differently than any other aspect of our lives, except that special provisions are necessary to disambiguate jurisdiction and to enable law enforcement to cope with the realities of the situation, much in the way "wire fraud" was created as a federal crime to allow enforcement agencies to cope with the jurisdictional questions of a crime committed in one state by a perpetrator in another. The internet is not special. All laws still apply.

Re:They don't get it

[cayenne8]

so go make your own society, where such controls don't exist

and after you get ripped off, by... get this... criminals... learn your lesson the hard way

criminality exists in this world. i'm sorry this bothers you, and i'm sorry in your naive rage you blame those who pursue criminality rather than criminality itself

Like another poster said, what about "innocent until proven guilty"?

I mean, if you're in the US, that's the way it is supposed to be.

If you suspect wrongdoing, then get a warrant, investigate....what's wrong with that?

Re:They don't get it

[Anonymous Coward]

But... you can have no connection to the U.S, but If you start selling your oil in bitcoin your country will get invaded.

What about gold mining in WoW?

[Anonymous Coward]

People exchange cash for the virtual currency, and exchange the virtual currency in the game all the time. Will Blizzard be subject to book-keeping and regulations?

What about other games with credits and item trading?

This is meant to kill Silkroad

[Xemu]

They will use this law to strike against Silk Road.

Remember, Capone was convicted on federal charges of tax evasion.

Pot...kettle...

[ProZachar]

"I think it's inevitable that just like you have U.S. dollars used by thieves and criminals..."

Unfortunately, the worst thieves and criminals (the government and the banks that have bought the government) will be the ones doing the regulating.

Re:Pot...kettle...

[IamTheRealMike]

I think you have to separate the question of whether X/Y/Z things are bad from the question of money laundering. AML is an extremely complex, expansive and vague set of laws that more or less attempt to fight crime by creating a systematic network of surveillance and control over the financial system. That's why you read about people having to automatically file paperwork for transactions that are "suspicious" (what this means is not well defined). That's why anonymous banking is illegal - the assumption is anyone could be a criminal so everyone has to monitored, all the time. And in fact, it appears that parts of the USG have created a system in which not only are such reports dumped, but all records of all financial transactions ever (this is the TFTP).

One may question whether systematic surveillance is the right way to fight crime ... whether the costs are worth the benefits. Most western societies instinctively reject widespread surveillance - we wouldn't accept government controlled security cameras in our homes despite the obvious application to crime fighting. However without anyone really noticing this is what's happened to finance.

The other scary thing about this system is that with the ability to track every transaction comes the ability to veto them too. Consider the case of the US citizen who got on the wrong side of Israel and was put on the sanctions list for 17 years. He was finally removed (and they agreed he was not a terrorist) after the Treasury was sued, 1 day before the law stated they had to respond. This kind of rampant abuse of power comes due to the ability to punish people without going via the courts, a power made possible by extensive AML controls.

Translation: Here Comes Big Brother

[Uberbah]

Same as when banks started having to report transactions of a few thousand dollars to the feds, because it could be "money laundering". If it's not the mob, it's terrahrists or pedos.

Same shit from both parties, different day.

Bit coin is growing up!

[Mabhatter]

Yea! Bitcoin is growing up! That means enough people are using it that the government is noticing. And of course the first thing the government does to show its appreciation is to start regulating it. Did they at least get a "Baby's first regulation" card?

Much better article

[SteveFoerster]

For the few, the proud, the article readers: Pelle Braendgaard of PayGlobe wrote a much better article on the same topic.

Inline stock quote

[necro81]

The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. WU +0.17%

Sigh. Inline, updating stock quotes in business and finance articles are annoying enough in their own context. When taken out of that context by a lazy and sloppy copy-paste, as had happened with this article summary, is just plain disappointing. Does nobody bother to copy-edit these things before they go live? I thought this was /., not reddit.

Money monopoly = wealth transfer

[moeinvt]

Money laundering? BS. If they cared about money laundering then they'd go after the bankers who are laundering millions of dollars in drug money for the cartels.

What this is really about is a banker-government that will do anything and everything possible to prevent alternatives to their fiat + fractional reserve monopoly on money. These parasites absolutely can't have us serfs using a money supply which they can't control and manipulate in order to enrich themselves at the expense of everyone else.

"Let me issue and control a nation's money and I care not who writes the laws." Mayer Amschel Rothschild

Re:Money Laundering is a Non-Crime

[DerekLyons]

The problem with all this is that "money laundering" generally comes from activities which are victimless crimes, and are therefore not a crime because they don't affect anyone but the person doing them.

Yeah - that money from a protection racket or from running a prostitution ring or from embezzling... no victims there. Or to put it another way, if you think ill-gotten gains only come from money that appears from thin air, you're either *very* innocent about how the world works or utterly and completely clueless.

Your solution to the Scrabble Problem of the day

[Sloppy]

Problem: Someone just placed a W tile. You have these tiles available to play: H, O, O, S and H.

Your proposed solution: spell the word "HOHOWS".

Analysis: That's not a real word.

Re:Money Laundering is a Non-Crime

[dkleinsc]

Drugs besides alcohol and prescribed pills are illegal because they circumvent a distribution apparatus.

That's not the reason why drugs are illegal. Harry Anslinger, who led the effort to outlaw pot in the 1930's, explained his motivations:
"There are 100,000 total marijuana smokers in the US, and most are Negroes, Hispanics, Filipinos, and entertainers. Their Satanic music, jazz, and swing, result from marijuana use. This marijuana causes white women to seek sexual relations with Negroes, entertainers, and any others."

That why the drugs favored by white people back in the day (tobacco and alcohol) are legal, but the drugs favored by non-white people at the same time (marijuana, opiates) are illegal.

The next major round of prohibitions was very explicitly because Richard Nixon wanted an excuse to lock up the hippies, who he saw as a threat to America.