Wednesday, June 26, 2013

New York, California and Virginia Warn Bitcoin Firms

If Bitcoin does not gain greater usage amongst the public at large, before government crackdowns make use of bitcoins much more difficult, BTC will be nothing more than an underground currency used for drug deals and other underground operations   The battle is on right now between Bitcoin and the government.  WSJ reports:

According to people familiar with the situation, banking regulators in California, New York and Virginia in recent weeks have issued letters telling the companies that they need to follow the state rules or prove that the rules don't apply to them.

The warnings fall short of formal "cease and desist" orders, which would demand that the companies immediately stop engaging in their business, these people said.

Still, the moves show that state regulators have moved beyond merely scrutinizing virtual currencies and now are taking steps to prevent people and companies from using them for illegal activities[...]Similar actions are expected from other states in coming weeks and months, according to people familiar with the matter.[...]

California is particularly important to the bitcoin community because many of the startup companies that are tied to the virtual currency are based there. California and New York are known for having stricter money-transmission laws than other states.[...]

In Virginia, a company called Tangible Cryptography suspended the purchase of the currency through its service called FastCash4Bitcoins after receiving a letter from state regulators who received a complaint that the company was operating as an unlicensed money transmitter, according to a notice on its website. Company representatives couldn't be reached for comment.

Tangible Cryptography said on its website that its activity is exempt from licensing requirements and that the commission's initial assessment contained factual errors.

"While we respond to the commission's notice, the prudent action is for the company to suspend all new transactions," the company said.

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