US Government Seeks to Regulate Bitcoin Transactions Under Anti-Money Laundering Rules


Money laundering is a serious concern for most, or all countries across the globe – be a developed or developing nation. That’s why every country has its own set of anti-laundering rules. While we all know that U.S. has strict money laundering rules for its currency, the nation’s Treasury Department is now putting money-laundering rules into practice for virtual currency as well.

Virtual and web currency is difficult to track. It allows for complete anonymity and privacy, and once a transaction is completed, there is no central server with information that a government agency could subpoena. This is the reason that the FBI fears the anonymous payment network (so, Bitcoin) is a haven for money laundering and other criminal activity.

The introduction of money-laundering rule means that firms that issue or exchange the increasingly Bitcoin, Amazon Coins, or any other web curency will now be regulated in a similar manner as traditional money-order providers, such as Western Union. They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000.

“I think it’s inevitable that just like you have U.S. dollars used by thieves and criminals, it’s sadly inevitable you will have criminals use a virtual currency. We want to work with authorities,” said Jeff Garzik, a Bitcoin developer.

As reported by a FinCen official, anti-money-laundering rules would apply depending on the “factors and circumstances” of each business, and do not apply to individuals who simply use virtual currencies for sale/purchase of goods.

As of now, it is not clear if the rules will be applicable to a merchant’s online scrips as well, such as of

“We are beyond the stage where this was just funny money and a fun online thing. This is used as a currency. When you have a commodity or currency whose value has grown as rapidly as Bitcoin it makes sense to hold on to it as a speculative instrument. It also is commonly used for online black markets or gambling sites. Whether used for money laundering…there is no smoking gun,” said Nicolas Christin, associate director of Carnegie Mellon University’s Information Networking Institute.

“Clearly this will not affect BTC exchanges directly, but it will mean that merchants and exchanges who are trading Bitcoins for dollars will need to report when large transactions happen,” says Kyt Dotson, SiliconANGLE assistant editor. As previously mentioned, anything can be used to launder money from virtual currency to boxes of Tide detergent–this has given pause to the watchdogs as well as stir some controversy and discussion on the criminal applicability of Bitcoin.

“It was inevitable that businesses who want to work legally with Bitcoin would find themselves regulated on the USD side. Already boxes of detergent, calling cards, and other tradable commodities have been used for criminal enterprise. In the end, it’s the transfer between local fiat currency and BTC that can be regulated and that’s probably where law enforcement and legislation will start.”