Tag Archives: regulation
States Targeting Bitcoin Companies for Money Laundering (Video)
According to a Wall Street Journal report, state regulators have issued warnings to a handful of Bitcoin-related companies, alerting them that they may be running afoul of money-transmission laws.
As the video below explains, because you can be largely anonymous in these transactions, there is concern that virtual currency can be used for money laundering or other illegal activities.
One of the companies identified as having received a warning is BitInstant. We also reported last week that the State of California issued a cease and desist letter to the Bitcoin Foundation.
We’ll be following this story closely.
CC image by by zcopley
California Sends Cease and Desist Letter to Bitcoin Foundation
California Goes After Bitcoin Foundation with Cease and Desist Letter
The State of California has concerns about Bitcoin.
The California Department of Financial Institutions has sent a cease and desist letter to the Bitcoin Foundation for engaging in the “business of money transmission without having obtained the license or proper authorization required by the California Financial Code.”
The penalties are severe, according to Forbes who first broke this story:
If found to be in violation of California Financial Code, penalties can be severe ranging from $1,000 to $2,500 per violation per day plus criminal prosecution which could result in fines and/or imprisonment. Additionally, it is a felony violation of federal law to engage in the business of money transmission without the appropriate state license or failure to register with the U.S. Treasury Department. Convictions under the federal statute are punishable by up to 5 years in prison and a $250,000 fine.
Below is a copy of the actual cease and desist letter. The Bitcoin Foundation has 20 days to respond in writing.
Via Forbes.
Bitcoin Exchanges in Canada Won’t Be Regulated – Report
Canada Bitcoin Regulation Will Allow Exchanges to Operate
With all of the excitement about Bitcoin, there is also a concern that governments will try to regulate the flow and restrict anonymity. Well, the team at Pokerati has an extensive article suggesting that Bitcoin exchanges won’t be regulated in Canada. Here is a summary:
Canada’s federal anti-money laundering agency, FinTRAC, has publicly indicated that it will not regulate certain bitcoin businesses because they don’t view bitcoins as “funds” within the meaning of applicable Canadian law. Specifically, transactions on a bitcoin exchange in Canada between parties exchanging bitcoins for Canadian dollars and vice versa will not, according to FinTRAC, engage the Money Services Business rules in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations. This could present interesting opportunities for those exploring new business models in the bitcoin space, but readers are cautioned that the federal Department of Finance might move to change the applicable regulations in future. This might be yet another instance of the law failing to keep pace with technology.
Read the full article “Canada Becomes Bitcoin Friendly.”
