The community around Bitcoin, the fast-growing virtual currency that sustains an economy worth more than $650 million, has been shaken by what seems to be the first government response to its phenomenal rise. Yesterday the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury Department, published some guidelines for how virtual currencies should be regulated — and it says many Bitcoin businesses need to register with the US government.
After mulling over its response for a day, the Bitcoin Foundation — the closest thing the decentralized currency has to a spokesperson — has released a statement condemning the rules. “I’m a little disheartened that FinCEN appears to be creating an entirely new regulatory scheme under the guise of ‘guidance,’” wrote Patrick Murk, adding that compliance would be “infeasible for many, if not most members of the Bitcoin community.”
According to FinCEN, people who use Bitcoins to purchase goods and services have nothing to worry about. However, any user or business that exchanges Bitcoin for another currency qualifies as a “money transmitter,” a type of MSB, and must register with FinCEN.
Luckily Mtgox (by far the largest BTC trade platform) is registered in Japan. Another popular one (which I use) is Blockchain.info, UK-registered. I can’t think of any that are US-registered, as long as regular consumers aren’t affected by this (as the first sentence I quoted suggests) it should be fine… although I imagine this could lead to problems with US users funding their exchange accounts using “local” methods rather than making an expensive international bank wire to Japan. That would probably cause a drop in value from the recently attained high of around $50 per bitcoin, since the USD/BTC exchange is the most active by a long shot.
Edit: Posted before reading the whole article. Didn’t know mtgox used a US subsidiary. In any case, they will never be able to effectively monitor the flow of bitcoins from address to address (you can use ‘mixing services’, etc). If you’re a criminal laundering money you can send them around in whatever amounts you like and get other people to change it to USD for you in bits, there is just so much less of a paper trail that whatever measures they take I don’t think it can be effectively regulated.
Was mistaken about $50, it climbed to almost 70 just recently. Occasionally the value drops but it always almost instantly corrects itself, bitcoins increase in value has been very fast in the past months. When I started buying them around the start of 2012 one cost around 8 quid, I think.