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US Treasury's Financial Crimes Enforcement Network "Reaching Out" To Bitcoin Businesses
Recently some of the more naive, not to mention top-ticking, financial commentators assumed that just because US regulators had not snapped shut a trap surrounding Bitcoin and other digital currencies yet, that this state of blissful cohabitation would continue indefinitely. Unfortunately, as we warned back in March during the initial leg higher in BTC following the Cyprus deposit confiscations, the well-known "honeypot" strategy was meant to draw out as many digital currency fans and participants as possible - who after all were warned by none other than the ECB that the current regime will never adopt a parallel, and quite threatening monetary unit - only to see the regulatory and enforcement fist of the nation that (still) hosts the reserve currency slowly but surely start to clench around the binary currency.
Because, finally, after testing the ground long enough, the fist is starting to not only close but squeeze tight. And as Reuters reports, it is the U.S. Treasury Department's anti money-laundering unit that is now warning businesses linked to Bitcoin that they "may have to comply with federal law and regulation as money transmitters, a Treasury spokesman said. " Specifically, the Treasury's Financial Crimes Enforcement Network (FinCEN) has sent "industry outreach" letters to about a dozen firms, regarding potential anti-money laundering compliance obligations related to Bitcoin businesses, FinCEN spokesman Steve Hudak told Thomson Reuters' regulatory information service Compliance Complete.
What is interesting is that unlike in traditional cases of money laundering, where the law is cut and dry, in the case of digital currencies, nobody really knows what the Treasury's jurisdiction - if any - or the law is. Which is why FinCEN is not only treading lightly but effectively giving so-called offenders a warning in advance of potential future action.
According to Reuters, a legal expert with years of experience representing digital currency firms said FinCEN seemed to be establishing a new regulatory enforcement precedent by warning individual businesses of compliance obligations before taking action. "Is this setting a new standard that in the future if there are any questionable business models there will be notice given before any action is taken?" said Carol Van Cleef, a partner with the Washington law firm Patton Boggs LLP. In response, Hudak said the letters are an attempt at gathering information. He likened them to the letters that banks sometimes send to customers seeking information about the customer's transactions in an effort to determine whether suspect transactions are truly linked to illicit activity.
Actually no: this is not a standard, new or otherwise, but is merely meant to telegraph the authorities displeasure with ongoing digital monetary activities, with an intent of halting all major activity before an enforcement mandate is handed down.
In the meantime, FinCEN's letters have had a "chilling effect" on Bitcoin businesses, which are intimidated by the threat of civil and criminal sanctions for non-compliance, said Jon Matonis, executive director of the Bitcoin Foundation, an advocacy group. The firms, he said, may effectively be "put out of business in an extrajudicial manner."
Which, basically, means the US government wants you to shut down regardless of what the law says. Which is precisely what happened with Utah's digital-to-coin converter Casascius as we reported previously.
And, as Reuters further adds, the fist grab is almost ready to pulverize:
While some Bitcoin businesses reject FinCEN's assertion that they are money transmitters, a number have still registered with the agency, a search of the Treasury bureau's website shows.
FinCEN sent letters to Bitcoin-related businesses on the Internet that appeared to fall under its definition of money transmitters but had not registered, Hudak said. He said FinCEN will keep sending letters to unregistered Bitcoin businesses.
"As we come across them, and as people tip us off, we'll make inquiries. That is part of what we do," Hudak said.
Perhaps this explains why at last check Bitcoin was now under $700 and gradually drifting lower. After all Uncle Sam is no longer shy about his true intentions regarding the digital currency.
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I agree with you that bitcoin is a real innovation which is gone shake-up the banking industry in the medium run say 5 -10 years.
But not before the possibility of fraud and poltical interference is reduced to accepted levels.
Not before the "net" is a neutral undertaking which means that the US are no longer the "owner" of the internet. This is presently not in sight. However, it can be expected, that China for example or Euroland do create their own "local" internet to be shielded from the ongoing NSA activities. Such independent nets can be used for communication and bitcoin transactions.
However in addition the bitcoin system it needs special hardware in the hand of all participants. Nobody with a sane mind would put his money including his savings at risk side by side on the same computer he is using to surfe the net.
Plus these BTM machines need to have the possibility to secure print statements showing the actual account status. Most of the people presently living on this planet do still trust much more something printed on paper compared to what can be seen on a computer screen. We do live in the electric age but the Gutenberg age still occupies some very important niches in the minds of man. There is an underlying fear, that suddenly the lights go down and nothing can be extracted anymore from your computer and your money is lost.
However if a person has no money in the bank but lives on credit, then it doesnt matter at all. Then such a blackout would be even highly welcome. That is the ultimate modern method of debt foregiveness. Just create a mayor blackout and all the debt of this world is gone.
any "double spending" problem could easily be solved with a PGP signature indicating 1 party validates receiving, another validating sending, and at least some number N (1, 2, 50000, who cares) also validating signatures on both messages.
Would be easy as dirt with existing free software requiring nothing at all for this exponentially increasing nonsense with bitcoin (for cost, difficulty).
Alright, let's go. Let's all trade 0.001 btc back and forth so we all get good at it. You receive it and then you send it. Let's end this debate or at least advance it.
1Miqw7N9F2b47pZr2zgNa9TCb825ESWqXf
I use BlockChain. Whatever. Transfer tiny amounts just to see how it works.
I am ready to transfer 0.001 btc to whomever. I will need your identifier which is that big long winded string of characters. Once I get that, I will transfer a very small amount of money to you with the argreement that you will transfer it back me. It is a trust based transaction but there will be no exchange of goods. It is simply an excercise to show how cryptos work and that they do work. This one is BitCoin.
1F3X2bdFFqdxMpc4LKMsBVzadxZz6tuNuX (edit) had to click "receive bitcoins"
Let's see how this works... you will need to edumacate me a bit as a newbie to get your .001 BTC back.
Never used it before- but if someone is willing to put their trust in me I can assure you I will send it back.
I have been on ZH since blogspot. Just one quiet ass SOB. :)
Now the ball is in your court.
QS
I am not good at this either...stand by.
You have it now.
Damn! That was quick... Now how do I send it back?
Yes it's fast for these amounts anyway. Send is right in the middle and then type in 0.001 and click send.
I am trying but it says the amount is too small...?
Spendable funds 0.0000000...
It is in the "unconfirmed" line item. I'm using Armory.
I imagine once it is confirmed I can send it back.
1Miqw7N9F2b47pZr2zgNa9TCb825ESWqXf
Send here
OK... as soon as it shows as spendable it will be returned.
I do not know either my friend, I am just a stupid gold bug but somehow I know some of those BitCoiners. I have really been getting sick and tired of fake bitcoiners on ZeroHedge and so have the true bitcoiners. Where the hell do you think I came up with some bitcoin? I posted my offer BEFORE I had any bitcoin. Bitcoiners are good folks. They are liberatarians. Like I said a few days back, most them own gold as well.
That is why we are going to try a little of this Bitcoin account trading just to see how it works. I have 56 cents into it on conversion for what I transferred to you. We could really irritate the statist bastards with just a tiny amount of bitcoin.
OK guys I have received an unconfirmed transaction of 0.001 BTC labeled with the ZH address I provided here. I have not used this address anywhere else, so this is the only place it might be from. Next step is to send it back to the Manipuflation address. Thanks.
That would be correct. I did send you 0.001 BTC. You bring up a very important point. I am not using Tor and would that matter? I did recieve the partial bitcoin.
Transaction is not yet confirmed. Apparently it expects multiple confirmations which might take a while. I will get it back to you when I get confirmation.
I am using the Multibit wallet, no exchange or other third party service.
GenX here. We know.
http://www.youtube.com/watch?v=S-0TYeg9Rzc
Well I don't care what anyone says... you are alright in my book, Manipuflation. LOL
Thanks again for the experience. My offer for a drink (or 10) stands. Would be awesome to meet up w/ a ZH'r one of these days!
Spokane or Coeur d'Alene~ don't get out much beyond that.
If Bitcoin chaps the asses of the elite and their ilk, I will give it a shot.
A fair statement Sir. Ten drinks would only get us started. You can't be an expert until you have at least 20 or so.LOL I'm glad you liked it and thank you for helping to prove the point. Now at least you can understand and so can others.
Um... it is requiring a fee of .0001 coin. Are you OK getting .0009 back or is there a better way? Like I said, this is new to me!
Search says transfers of less than .01 coins require a fee (considered coin "dust"). I'm sending it back but it will be less the fee.
You live anywhere near north Idaho? I'll buy the first round as a thank you!
Hope the .08 cents does not put you out too far! (depending on where you bought in)
Thanks for the trust.
No worries. It is an experiment. Nothing ventured nothing gained. I chose a different way to question Bitcoin.
I promise to return this Bitcoin amount to the Manipuflation address above as soon as I receive it.
I have generated a unique receiving address for ZH experiments:
1Am9zvq3mWJttREpFRXup2TxHEeMvf53QJ
0.001 sent.
I was also bitten by the fee. So I returned half the amount. I will return the remainder when I can work out my problems with the software.
A valuable experiment. I never tried to send Bitcoin to someone's address before, so I had no idea what would happen.
Bitcoin shouldn't be worried so much about capital gains tax, such is inevitable, and is applicable to gold silver etc.... just builds into the price. And it isn't such big deal if anonimity is compomised by trading/tax laws, unless you are trying to avoid stuff.
I would be happy if bitcoin could join gold and silver as another alternative to holding fiat. For me the worth of bitcoin would be as something safe from fiat devaluation and its unique liquidity. But first it needs to prove itself in some pricing sensibility and go through the regulatory wringer and come out the other side.. so we know where we stand.
I think bitcoin has a place, will stay around and become another alternative, but with its also unique vulnerabilities regarding platform and network dependency.
btc biggest prob is running out of idiots to buy it
Physcial gold and silver gains are taxed as ordinary income, I except BTC to be the same and if regs are not put out by the IRS one should report income as ordinary not cap gain to avoid a tax audit. If they say it is cap gain, you can then do an amended return at a later date.
no,
where bitcoin really needs to prove itself is in a grid-down situation.
prove that users of it will re-build in active hostile environments any grid needed to make the currency work.
Just as physical goods & gold coins must meet each other somehow people make it happen.
In this manner I'd demand that any grid segments needed for bitcoin to work be built on the fly, let's see if people are determined. And not using it as a fiat multiplier.
I thought, for all intents and porpoises, the exchanges already do.
I wish the authorities would be THAT interested in the illegal! CLEARLY ILLEGAL aliens that are here. Hey over here....... these illegals need to be exported now.... bitcoin is still LEGAL!.
you're all illegal
http://youtu.be/knHE31FtJww
Central Banks', governments' and authorities' coordinated attacks on Bitcoin around the world really make it hard for Bitcoin to survive in its present form. However, if only one country would announce "full legalization and acceptance" of Bitcoin, that would be a game changer, and a chance to survive.
But we know all around the world governments (and the central banks which got their power from the governments) have monopoly when it comes to issuing a currency. Hard to imagine any country to give up this monopoly voluntarily. It's easier to think that new currencies based on the new technology will arise AFTER the global financial system collapsed. Until then, there won't be any competition allowed to disturb the only-fiat world of currencies.
Or some third world-country will accept it first.
But I truly believe that this technology will change the world. I am not saying it from an ideological or political standpoint, I am meaning it practically. Banksters and monetary policy makers will use it to make fiat currencies better, and I think in years there will be currencies legally issued by private companies. This is the next step in the evolution of the financial system after starting using computers in the 20. Century.
My conspiracy theory: Someone is trying to use bitcoin to sucker more Chinese. And when the bitcoin bubble blows, it may rattle more Chinese economically. But since Chinese government shut it down early, it is no point to keep bitcoin alive. It is time to kill off another threat to fiat currency. Of course, unless JPM get the patent to the digital currency, then it will be a different story.
I wouldnt buy bitcoin with chinese money.
"After all Uncle Sam is no longer shy about his true intentions regarding the digital currency."
The head of the bankster hydra rottentick says to his closest minion: "garble...harumpth...slober...gurgle...ah...go tell those puppets of mine at FinCEN...gurgle...barf....slop...that the lorad high bankster in charge orders them...ralph...slobmosis...drool...to go and take down the bitcoin operation at all costs...slime...burp...gurgle...they are competing against my world domination god the SDR and we do not like that...upchuck...slaver...scumlick....bark bark...harumpth!
Yes, Sir Thing!
Financial Crimes Enforcement Network
That's a joke right? A play on the absurd?
been warning you dopes all along this was going to end badly.
better you than me
BITCOIN = IQ TEST
YOU FAILED
So now, all you gold fetishists can join hands with the folks losing 50% in btc.
a real clusterf&&k of idiots.
its not a currency
its a pink sheet pump and dump
get real clowns
BTC back below $600.
God's speed Do Chen Bearing!
Who let the dogs out.
Got the Sinaloa going after 18th Street.
Homey you ain't gotta lie to kick it.
Shake the spot
Kill game.
FEDs gone rogue. Expect $311 if an April repeat.
Long live the revolution.
i can get the latest price of bitcoin (563.84 as I type) by typing MT into the web addy thingy...rhymes with "empty", now ..is that a threat or a promise? i guess it amounts to the same value...nothing.. :>)
oops...fat finger...just had to uptick it to 1,500 my bad
Probably not the smartest thing to do. I started with 0.01 fractional bitcoin hours ago. I offered the fractions so as to observe how bitcoin works via transfers. We are talking about 56 cents. That is not the point with me at all. Hours later I only have 0.0087 btc. You miss the point with me.
"NETeller, admitted criminal wrong doing and agreed to forfeit $136,000,000 for its part in a conspiracy to promote Internet gambling businesses and to operate an unlicensed money transmitting business. The company also agreed to return $94 million held in the accounts of U.S. customers since January 2007. The two founders of NETeller, Stephen Lawrence and John Lefebvre pled guilty to conspiring to promote illegal Internet gambling businesses and agreed to forfeit $100 million.
In October 2009, PREET BHARARA, the United States Attorney for the Southern District of New York, and JOSEPH M. DEMAREST, JR.,Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, announced that OptimalGroup, Inc, a company based in Canada and publicly traded on the NASDAQ had agreed to forfeit approximately $19.2 million in criminal proceeds derived from processing payments for illegal Internet gambling websites as part of a non-prosecution agreement. From 2004 until October 2006, Optimal, operating an electronic wallet called Firepay, allegedly processed more than $2 billion worth of illegal gambling transactions for United States customers."
DOH!
Governments don't like to be seen as crushing alternatives, they just chip away at them until the foundations are removed and the thing falls over itself.
BitCoin is vulnerable on several fronts:
1. An attack on the protocol itself. E.g. http://slashdot.org/story/13/11/04/2247258/bitcoin-protocol-vulnerabilit....
2. An attack on the Internet. BitCoin depends on a distributed consensus which requires at least a minimally trustworthy communication medium. If the Internet is down, your bitcoins are worth fuck-all.
3. A regulatory attack, like what we're starting to see. If sufficiently draconian regulations are set up around BitCoin transactions, and if the enforcement is sufficiently rigorous, the currency will become unattractive to enough people that it will be strangled.
Overall, while I like the idea, I think I still prefer gold and silver, due to these risks.
YOU BETTER GET OUT NOW WHILE YOU CAN!!!! I have never said this about BTC Before; but the WRITING IS ON THE WALL!!
so you're looking to buy some cheap bitcoins?
considering they will be pennies there are none cheap today.
Central Banks Launching Worldwide Coordinated Attack On Bitcoin
Bitcoin Bubble is busted, trades below $350 on BTCChina. Now U.S. Treasury is moving according to the plan we have discussed few days ago.http://sufiy.blogspot.co.uk/2013/12/european-banking-authority-warns.htm...
Never been a fan of bitcoin and imo gold is still too damn high but if forced to choose one or the other as payment it would be gold. Until bitcoin has their own police state, spy org, military omnipresence, etc., they cannot use the internet to compete with the money maggots.
I don't believe that the price of a bitcoin can rise above the price of a physical 1 ounce gold bullion coin.
why dont they focus on the MONEY LAUNDERING KICKBACK/guns/drug SCHEME that Obama made with the Sinaloa cartel... you know the one that is part of FAST AND FURIOUS/ATF gunwALking deal that is also part of similar ops run out of Miami and Houston...the one Issa cant get any info on because Obama used EXECUTIVE PRIVILEDGE to cover Holder's ASS... and with the DC court in Obama's pocket the LAW gets FUCKED once again...
Bitcoin was bid way too high by over-eager speculators. It's still experimental software.
People should be experimenting with pocket change rather than investing their life savings.
For example, I installed the Feathercoin "client" and it has various sorts of weird bugs. I had to search discussion groups to find out how to get it started properly. And if you want to try mining, it's even more of a nightmare, even if you have some tech experience.
1% Banks prefer cocoine.
By the way, fools and their money are so parted. Two bits for your coin.
This from:
http://en.wikipedia.org/wiki/History_of_Bitcoin#Regulatory_issues
"On 18 March 2013, the Financial Crimes Enforcement Network (or FinCEN), a bureau of the United States Department of the Treasury, issued a report regarding centralized and decentralized "virtual currencies" and their legal status within "money services business" (MSB) and Bank Secrecy Act regulations.[32][37] It classified digital currencies and other digital payment systems such as Bitcoin as "virtual currencies" because they are not legal tender under any sovereign jurisdiction. FinCEN cleared American users of Bitcoin of legal obligations[37] by saying, "A user of virtual currency is not an MSB under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations." However, it held that American entities who generate "virtual currency" such as bitcoins are money transmitters or MSBs if they sell their generated currency for national currency: "...a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter." This specifically extends to "miners" of the Bitcoin currency who may have to register as MSBs and abide by the legal requirements of being a money transmitter if they sell their generated bitcoins for national currency and are within the United States.[30]"
So, unless the FinCEN is changing positions, this only applies to miners.
but...but... teh b1tcoinz iz untraceable!!