Bitcoin and other Virtual Currencies Raise New Risks, Says US Attorney General

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Bitcoin and other Virtual Currencies Raise New Risks, Says US Attorney General
Bitcoin and other Virtual Currencies Raise New Risks, Says US Attorney General

Bitcoin and other Virtual Currencies Raise New Risks, Says US Attorney General

The first African American to hold the position of US Attorney General, Eric Holder in his view that he put to a congressional panel Tuesday said that Bitcoin and other virtual currencies raise new risks for money laundering and other illegal activities. His apprehensions are not baseless though, particularly after several such instances taking place recently.

The 82nd Attorney General of the United States, Eric Holder said that more than ever before, the department’s law-enforcement work today must contend with new and emerging technology, including virtual currencies such as Bitcoin. His statement came when the attorney general put his views at a hearing before the House Judiciary Committee.

He strongly condemned virtual currencies as he considers that these can pose challenges for law enforcement given the appeal they have among those seeking to conceal illegal activity. Bitcoin which touched the new heights the last year reaching to the benchmark $1200 has since declined to a great extent and its value has gone down to half.

A lot of concerned voices have come up recently and Mr. Holder’s remarks signal the latest ominous sign for Bitcoin. Though several other opinions who have stakes in Bitcoin say that it should be given some more time to mature and seek regulation to rule out any sort of use in money laundering, a section says that it is against the spirit of Bitcoin.

The basic concept of Bitcoin itself rules out any intervention by any central bank of any country and if regulations are kept on it, it would be against the fundamental difference it has with fiat which is manipulated by the governments and central banks. However, when it is the question of survival of Bitcoin itself, it is indeed necessary that some sort of regulation is accepted.

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Regulation is needed to Rule out Money Laundering Using Bitcoin

Regulation, particularly after the collapse of the Bitcoin exchange Mt. Gox, which announced it lost roughly $500 million of Bitcoins, according to some critics is need of the hour. Some appeals have been filed in the US courts that are seeking an action against the perceived fraud by the owner of Mt. Gox.

Putting his strong opinion against Bitcoin to Congress, Mr. Holder said federal prosecutors are working with financial regulators to understand the changing technology of money. His opinion that virtual currency systems must comply with anti-money-laundering statutes and know-your-customer rules is not new though.

Mr. Holder also condemned those who favor virtual currencies solely for their ability to help mask drug trafficking or other illicit conduct should think twice. He promised that the department is committed to innovating alongside this new technology in order to ensure investigations are not impeded by any improvement in criminals’ ability to move funds anonymously.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com