The end of Bitcoins? US opens investigation
The bitcoin logo. Photo credit: Wikipedia
Bitcoins are everywhere. Every conference I’ve been to over the last 12 months, at least someone has mentioned the B-word either part of their public presentation or in hushed tones by coffee station.
First, a bit of background on bitcoins – a virtual currency kept in a digital wallet that can be used to purchase goods and services or sold on an exchange. They can be acquired by a complex process called ‘mining’ and only a limited number can be created. Traditionally they have been linked to purchases of illegal substances, weapons and so forth, as they are not monitored by traditional financial institutions.
This week, bitcoins have hit the headlines in the US and around the world as the Senate’s committee on homeland security sent a letter this week to the major financial regulators and law enforcement agencies asking about the” threats and risks related to virtual currency”.
In addition, the top financial regulator in New York, Benjamin M. Lawsky, also sent subpoenas to 22 companies that have had some involvement with bitcoin – reportedly two of which are companies run by Google and internet investors such as the Winklevoss twins (see here for original story).
As CNBC put it ‘Bitcoin gets the FBI, Homeland treatment’.
Issues on tax evasion, dangers of fraud, associations with money laundering and risks to national security are all said to be concerns over the virtual currency that the authorities are looking into. However, it is this very lack of regulation surrounding it that is attracting some investors, so what will this mean for the future of Bitcoin?
Will the authorities be able to drag the virtual currency out of the dark and into transparency?
Let us know what you think.