Senate Bitcoin Hearing Discusses Legitimacy and Challenges of Virtual Currencies

By Danny Bradbury

View the full video of the Senate Homeland Security and Governmental Affairs Committee hearing on virtual currencies here.

Don’t bother running from regulation, said an influential agency director at a key government hearing on Monday 18th November – because in the long term, there’s nowhere to hide.

FinCEN director Jennifer Shasky Calvery warned virtual currency companies against fleeing US shores in the hope of more lenient regulatory frameworks elsewhere.

“If business is going to leave the United States based on perceived or actual regulatory burden, I always believe that they’re going to find that gain short-lived,” she said.

Calvery was responding to a question from Senator Tom Carper, chair of the Senate Homeland Security and Government Affairs Committee Hearing on Virtual Currency. He asked her about the danger of US companies leaving the US, and taking jobs and revenue with them, because of strict regulatory guidelines in the US.

If this virtual payment system is going to survive and be a real player in the financial system, regulation is going to catch up, because it has to.

“Every country has an interest in protecting its financial system from illicit actors who launder money or move it on behalf of terrorist organisations, in collecting taxes and protecting investors and protecting consumers from fraud, and ensuring a stable economy,” said Calvery.

“If this virtual payment system is going to survive and be a real player in the financial system, regulation, both at home and abroad, is going to catch up, because it has to.”

The US participates in a Financial Action Task Force, which is an inter-governmental body designed to harmonise policies on anti-money laundering legislation.

Calvery’s sentiment drew criticism from Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University and director of its Technology Policy Program, who also testified at the hearing.

“The danger is not that somebody who is trying to facilitate an illicit businesses will leave the US,” he said. “The danger is that real hard-working entrepreneurs who are looking to comply just don’t find a regulatory environment that is amenable here.”

Patrick Murck, general counsel for the Bitcoin Foundation, called for leadership in the banking industry to ensure that bitcoin companies were ‘on-boarded’, to avoid what he called a chilling effect on bitcoin in the US.

Those comments echo those of CoinDesk’s own contributing editor and head of the Bitcoin Foundation Jon Matonis, who penned an op-ed here over the weekend warning of weakening US influence in bitcoin trading.

At the federal level, government speakers suggested that current regulations were adequate. Across the board, the Department of Justice, FinCEN, and the Secret Service suggested that existing statutes were sufficient to regulate virtual currencies as they stood, and didn’t suggest new legislation specifically for bitcoin or other decentralised digital cash.

Individual states were another issue. Jeremy Allaire, founder of <a target=_blank …read more

Source: CoinDesk