Bitcoin Foundation: 'FinCEN should clarify all virtual currency transactions aren't inherently suspect'
Published on July 19, 2013 at 19:53 GMT
The Bitcoin Foundation has asked the Financial Crimes Enforcement Network (FinCEN) to make sure its rule against Liberty Reserve doesn't suggest all virtual currency transactions are inherently suspect.
The foundation has written a letter to FinCEN in response to its proposed rule on the 'Imposition of Special Measure Against Liberty Reserve S.A. as a Financial Institution of Primary Money Laundering Concern'.
In the rule, FinCEN states that "Liberty Reserve's system is structured so as to facilitate money laundering and other criminal activity," and cites the anonymity of the system and the irreversibility of transactions as evidence of this.
It suggests that, due to this, financial institutions should be required to impose “special measures” against Liberty Reserve, S.A. under Section 311 of the Bank Secrecy Act.
The letter issued by the Bitcoin Foundation states it:
"… does not take issue with the imposition of special measures against Liberty Reserve. Rather, the Bitcoin Foundation is filing these comments to urge FinCEN to clarify statements made in the Proposed Rule and the underlying Notice of Findings that could be misinterpreted to suggest that virtual currency transactions in general are inherently suspect."
The foundation believes the detail in FinCEN's proposed rule could be misinterpreted to suggest all digital currencies are dubious from a money laundering perspective.
Patrick Murck, of the Bitcoin Foundation, told CoinDesk: "While we have no intention of defending Liberty Reserve, we were compelled to point out the incorrect and unnecessary conclusions FinCEN drew with regard to private and irreversible transactions.
"These inaccuracies have created a chilling effect in the banking industry as they deal with compliance issues in the virtual currency industry and the record demanded correction."
Liberty Reserve was a Costa Rican-based, low-cost payment processing service that used its own digital currency, the Liberty Reserve dollar. It was shut down in May 2013 after its founder was arrested under suspicion of money laundering.
The full response letter from the Bitcoin Foundation is included below.
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