Monday, April 1, 2013

U.S. Applies New Money Laundering Rules to Bitcoin, Defeating Its Purpose

Using Bitcoin to launder all the cash from your illegal dealings just got a little harder. The United States Treasury Department just enacted new rules to regulate Bitcoin and other virtual currencies, making it subject to the same level of scrutiny as other forms of currency. That's bad news for anyone looking to launder money using Bitcoin, but it could be good news for proponents of virtual currency for legitimate purposes.

The new rules will see Bitcoin regulated like Western Union. Little is expected to change for individuals trading in Bitcoins, but businesses will be required to keep more detailed records of the transactions. There will also now be a rule that any transactions over $10,000 must be reported.

The measures are aimed at stopping illegal activity like money laundering done with virtual currency. But as Bitcoin developer Jeff Garzik points out, "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."

Just because some criminals use Bitcoin, does not mean it's a criminal empire. Although the new rules should make it harder to use things like Bitcoin for illicit activity, having the Treasury department regulating it should make supporters of virtual currency happy to see that it's getting a level legitimacy it didn't have before. -

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