Bitcoin group meets US law enforcers

PUBLISHED : Wednesday, 28 August, 2013, 12:00am
UPDATED : Wednesday, 28 August, 2013, 3:32am

A Bitcoin trade group has met an array of US law-enforcement officials and regulators to discuss oversight of the digital currency.

Members of the Bitcoin Foundation briefed representatives of the Treasury Department's Financial Crimes Enforcement Network (Fincen), the FBI, IRS, Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance and Secret Service on the nature of the virtual currency, created four years ago.

"It's a kick-off of engagement," said Peter Vessenes, chairman of the foundation's board, who had said the meeting would be "standing-room only", because of the high interest among government officials.

"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."

Fincen released guidance in March saying digital-currency administrators and exchangers were considered money-services business subject to regulations and anti-money-laundering controls. Stephen Hudak, a Fincen spokesman, called it a "routine" meeting.

The Bitcoin Foundation, a Seattle-based group that promotes the currency, aims to improve security and standardisation for the "non-political online money", its website says. Vessenes described Monday's meeting as an "educational meet-and- greet".

The discussion is "part of our ongoing dialogue with virtual currency providers", said John Sullivan, a Treasury Department spokesman.

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.

They can be used to buy and sell items ranging from cupcakes to illegal narcotics, and the surge in their value has created millionaires out of early collectors. The potential difficulty in tracking illegal transactions has drawn the attention of regulators.