Federal Reserve admits it doesn’t have the authority to ban Bitcoin

medium_10680057786If Senator Joe Manchin’s call for an outright ban on Bitcoin had you worried yesterday, there’s good news in store – apparently, the Federal Reserve has no authority to do so, and indeed, it’s doubtful it could even if it did have that authority.

The word came straight from the horse’s mouth. Federal Reserve Chairwoman Janet Yellen was quite clear when she told the Senate that “the Federal Reserve simply does not have authority to supervise or regulate [B]itcoin in any way.” Yellen went on to say that Bitcoin is “a payment innovation that is taking place entirely outside the banking industry,” a comment that seems to suggest there’s little it could do to stop it so easily.

If anything, Yellen’s remarks can be taken as a kind of acceptance that Bitcoin is here to stay, at least for the foreseeable future. She believes that Congress needs to work on accommodating Bitcoin and other cryptocurrencies:

“It certainly would be appropriate, I think, for Congress to ask questions about what the right legal structure would be for virtual currencies that involve nontraditional players,” she added.

Yellen’s comments came less than 24 hours after Sen. Manchin wrote a letter calling for the US government to ban Bitcoin, citing problems with its volatility and concerns that it could be used for illegal transactions.

Claws are out for MtGox

 

mtgox-nukedIn other Bitcoin news, there’s been a few more developments with MtGox’s slow and agonizing death. First up is the news that authorities in both Japan (where MtGox is based) and the US have launched investigations into the exchange’s activities. The Wall Street Journal reports that Japan’s financial regulators finally appear to have been jolted from their slumber, having previously all but ignored MtGox’s misdemeanors. Now though, Japan’s Chief Cabinet Secretary Yoshihide Suga has issued a statement, saying that “ministries and agencies concerned — financial services, police and the finance ministry — are looking into the matter to learn the full scope of the issue.” However, it’s not clear what action these concerned agencies might take, if any.

Meanwhile, U.S. Attorney for the Southern District of New York Preet Bharara has reportedly issued subpoenas to MtGox and other prominent Bitcoin exchanges, says Reuters. Bharara reportedly wants to know what happened during the latest wave of attacks on Bitcoin exchanges in the wake of the transaction malleability debacle, and what Bitcoin-related businesses are doing to protect themselves.

No acquisition likely

 

This morning, the Bitcoin entrepreneur who first leaked details of MtGox’s “crisis strategy draft” revealed in a new post that the exchange has been unable to woo any new investors, which means that those who still have BTC or fiat with the site can almost certainly kiss it goodbye.

Ryan Selkis claims that it was the investors themselves that blew the lid on just how bad the crisis was at MtGox:

“The solicited investors rebuffed Karpeles and his colleagues, demanded they come clean to customers and stakeholders immediately, and then notified other industry executives, including those at the Bitcoin Foundation, of the catastrophic losses at Mt. Gox.”

Presumably, this is what prompted a number of other prominent Bitcoin businesses to unite in their condemnation of MtGox, describing the business as “insolvent” and accusing it of a “tragic violation” of its user’s trust.

Main photo credit: btckeychain via photopin cc

About Mike Wheatley

Mike Wheatley is a senior staff writer at SiliconANGLE. He loves to write about Big Data and the Internet of Things, and explore how these technologies are evolving within the enterprise and helping businesses to become more agile. Before joining SiliconANGLE, Mike was an editor at Argophilia Travel News, an occassional contributer to The Epoch Times, and has also dabbled in SEO and social media marketing. He usually bases himself in Bangkok, Thailand, though he can often be found roaming through the jungles or chilling on a beach. Got a news story or tip? Email Mike@SiliconANGLE.com.