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Bitcoin Discusses Online Currency With Feds

Bitcoin Discusses Online Currency With Feds

A Bitcoin trade group met with members of the U.S. Treasury Department’s Financial Crimes Enforcement Network, regulators and law-enforcement officials to discuss digital currency.

The August 26 meting came amid a growing focus on digital currency. Unlike regular currencies, Bitcoin is not backed by a central government, but instead created by a computer program. The currency can be traded or used to buy goods and services.

That has attracted the attention of regulators concerned about potential money laundering abuses and its use in funding illegal activities including drug purchases.

The Bitcoin lobbyists briefed representatives of agencies including the Federal Bureau of Investigation, Internal Revenue Service, Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and Secret Service on the four-year-old virtual currency.

“It’s a kickoff of engagement,” said Peter Vessenes, chairman of the foundation’s board. “Right now, law enforcement would read a salacious story, and not know what’s going on. We can help them understand what’s going on.”

While described as “ongoing dialogue” by government officials, the meeting comes as the digital currency faces increased scrutiny.

The U.S. Senate Homeland Security Committee is currently investigating whether to establish regulations for the virtual currencies and New York banking officials recently sent subpoenas to 22 digital-currency companies, including BitInstant LLC and Dwolla Corp., to also determine whether new regulations should be adopted.

In March, FinCEN released guidance saying digital-currency administrators and exchangers are considered money-services businesses subject to regulations and anti-money-laundering controls.

Bitcoin was designed by a person or group using the name Satoshi Nakamoto, and the actual currency is created through a system called mining, in which connected computers process Bitcoin transactions and earn their owners Bitcoins as a reward. According to Blockchain.info, there are more than 11.5 million Bitcoins in circulation.

 

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