It's clear Bitcoins are growing in popularity. The price of the
currency soared to a new all-time high of $675 Monday, up from only $12 a
year ago. Without meddling banks in between transactions, Bitcoins
trade seamlessly and offer nearly as much privacy as cash.
That's why the Senate Committee on Homeland Security and Government
Affairs is hearing from various sides Monday. According to prepared
statements from the Justice Department, an official at the DOJ said it
needs more help catching criminals who use the secretive currency.
Meanwhile, Bitcoin users want the government to back off and let the
system blossom.
Law enforcement doesn't like the anonymity - there
are legitimate uses for Bitcoins. But it's also being used to
anonymously buy drugs, hire assassins, trade child porn and dodge taxes.
The nation's acting assistant attorney general, Mythili Raman,
described the more notorious ways Bitcoins are being used. She
mentioned the recent FBI shutdown of Silk Road,
an online black market. Illicit drugs and services
were sold there using the untraceable currency. The agency
arrested its alleged founder and seized 170,000 BTC, valued at $101
million as of Monday afternoon.
The way Bitcoins are transacted, using coded wallets and special keys that don't need real names,
enables substantial privacy. That makes it more difficult to
follow the money and catch criminals.
Along those lines, there are concerns that
those making money from sex trafficking and pornography involving
children have started to adopt Bitcoin.
The International
Centre for Missing and Exploited Children noted how anonymity offered by
Bitcoin has made it the currency of choice for predators. The nonprofit
group's president, Ernie Allen, says he's not against the digital
economy. But he wants it less private.
"If the perception of anonymity diminishes, we believe the criminal use will diminish with it," he said in prepared remarks.
Edward Lowery III, who leads the Secret Service's criminal
investigative division, added that the technologically complex Bitcoin
system makes it hard for everyday agents to stay on targets' tails. They
need more tech-savvy investigators than the agency can currently
afford.
Also chiming in was the potential regulator that could one-day ruin the unregulated Bitcoin party: The Treasury Department.
Treasury already issued guidance in March saying that groups exchanging
Bitcoins must register with the government and keep records. Everyday
Bitcoin users remain unregulated. Jennifer Shasky Calvery is head of the
department's financial crimes unit and warned about leaving the Bitcoin
community untouched.
"One of our biggest challenges is striking the right balance between the costs and benefits of regulation," she said.
The Bitcoin community doesn't want too much regulation. Fans
of Bitcoin say the currency is going mainstream, and it's not just for
internet weirdos. That's why they want the government to give it a
chance to grow and thrive without tacking on burdensome rules.
The Bitcoin Foundation, a group that seeks to strengthen the digital
system, is trying to convince politicians the currency works as is.
The group also notes that meetings with financial regulators have gone
well so far, but the Treasury Department should have met with Bitcoin
supporters before taking a stance earlier this year.
"The American people have been reminded this year of reasons to be
concerned for their privacy," says the group's attorney, Patrick Murck,
referencing the recent disclosures about unwarranted government spying
on innocent citizens.
Source: CNN Money
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