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Think Big. Move Fast.

Earlier this week the Federal Government shut down Liberty Reserve, a digital currency exchange, alleging that it ran “what amounted to an online, underworld bank that handled $6 billion for drug dealers, child pornographers, identity thieves and other criminals around the globe.”

Many commentators immediately asked, is Bitcoin next?

It seems like the answer is “no”.

The LA Times, writing about the Liberty Reserve Press conference, notes

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U.S. officials were careful to say Tuesday that they were not targeting digital currency systems — so long as they comply with the law.

“If they do so, they have nothing to fear from Treasury,” said David Cohen, the U.S. Treasury’s under secretary for terrorism and financial intelligence.

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Cohen’s full quote is, “In recent years virtual currencies have become a popular method of transferring funds because of the ability to conduct transactions any time, from any location with internet access. I want to make clear that today’s action does not mean that we are trying to eliminate virtual currencies. To the contrary, mobile and internet based financial technology, including virtual currencies hold great promise to empower consumers, encourage the development of innovative financial products, and expand access to financial services. In fact FinCEN issued guidance in March 2013 to bring clarity and regulatory certainty for businesses and individuals engaged in money transmitting services and offering virtual currencies. This guidance explains that under FinCEN’s rules, administrators or exchanges of virtual currencies have registration requirements, and a broad range of effective anti-money laundering record keeping and reporting responsibilities. Those offering virtual currencies must comply with these regulatory requirements, and if they do so, they have nothing to fear from Treasury.”

Furthermore, in a Q&A about DigitalCurrency with American Banker, Jennifer Shasky Calvery, the director of Fincen, says about the Liberty Reserve action:

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I think that action was against one financial institution and one type of financial service. That’s what a criminal case is, that’s what a regulatory action is. It goes against a particular violator. I would be hesitant ever to paint a broad brush because of one criminal action against an entire industry. I don’t think that’s fair to an industry in any situation, let alone this one.

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And later about digital currencies in general:

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What I do think, though, is that digital currencies are exciting because of the innovation around it. I think it shows the great innovation that’s going on in the financial services industry these days, whether it’s a digital currency or whether it’s using other types of technology to improve and extend financial services to those that are unbanked or to make things more efficient or to be able to do things in a different way that has a customer base. That innovation is a great thing. But the fact is that being a financial institution comes with certain responsibilities.

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As I’ve said before, compliance with FinCEN guidance and other regulation is one of the three key elements for building trust in the Bitcoin ecosystem. The other two are having trustworthy people and organizations around your company (including management, directors, advisers, investors, lawyers and bankers) and developing a history of strong security, of withstanding attacks from hackers. With these three elements in place a company in the Bitcoin ecosystem can build trust with users and establish a leadership position.

 

  • Jack

    a kind of Internet data MLM but not Cosmetology products or healthy