Just when you thought you could hide your money somewhere on the internet the treasury department has to step in and kill all the fun. I'm sure many people on here are familiar with virtual currencies like bitcoin, which are now straight in the cross hairs of officials.
The U.S. is applying money-laundering rules to "virtual currencies," amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities.
The arm of the Treasury Department that fights money laundering said Monday that the standard federal banking rules aimed at suspicious dollar transfers also apply to firms that issue or exchange money that isn't linked to any government and exists only online.
Now this isn't necessarily a HUGE story as far as things go but it is telling that officials are heavily cognizant of any possible way to get out of traditional currencies and preserve your privacy. Really it seems to me they simply don't like the fact that they can't control these virtual currencies and the representation of an acute lack of faith in traditional currencies as these grow.
"When you have a commodity or currency whose value has grown as rapidly as Bitcoin it makes sense to hold on to it as a speculative instrument," he said. It also is commonly used for online black markets or gambling sites. "Whether used for money laundering…there is no smoking gun."
Again, I can't really decide if this is a huge deal or just something that was coming down the line no matter what. I'm not sure how many people are moving amounts over 10g's into virtual currencies but it is disconcerting that there seems to be no privacy left anymore. An interesting note at the end of the article is that bitcoins rallied pretty heavily when the Cyprus news hit this past week... are people really using this as a vehicle to place money?
What do you guys think? How huge a deal is this? Regardless, it is interesting that virtual currencies are gaining this much traction.
Just read the WSJ article on this and it is really an interesting topic. I first heard about Bitcoin on NRP's Real Money Podcast and think the idea of a universal currency is crazy and ingenious at the same time.
Here's the article: http://online.wsj.com/article/SB100014241278873243732045783746113511252…
Funny you bring this up. I'm actually working on an in-depth analysis of BitCoin (which I'll probably break up into a series for WSO), and I just met with the CTO of Paymium last night. We're getting together in a couple weeks to go over their entire operation (for those who don't know, Paymium is one of the predominant players in the world of BitCoin and they're the creator of InstaWallet - the most popular BitCoin wallet in the world). They run the Euro-BitCoin exchange here in Europe (BitCoin Central) and a large part of our conversation last night was impending taxation and government regulation.
The long and short of it is, it's still so new both sides are trying to figure it out.
Yea, I'm sticking to my precious metals.
Interesting post. Kind of crazy to think that people are going to speculate about this, but i guess more than a few speculative investments seem crazy at time. The Cyprus rally is good indicator that failure of gov. fiat currencies and backed deposits will strengthen virtual currencies...so if you are really short on the Euro, long the BitCoin, haha.
Braverman - I hope you share your analysis with WSO, I would be very interested in hearing about what you find.
Looking forward to the series eduardo
Interested as well
I have a TON of gold from Runescape - what do you think, can I peddle that? Anyone want some RS gold?
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