Thursday, August 15, 2013

DHS and FBI Input on Bitcoin Sought

Virtual currency bitcoin is to be investigated by both the Federal Bureau of Investigation and the U.S. Senate Committee that oversees the Department of Homeland Security.

The DHS was sent a letter on Monday from the U.S. Senate Committee on Homeland Security and Governmental Affairs asking for any information, plans or strategies on how it currently or plans to treat virtual currencies, including bitcoin, reports CNBC.

In a letter, the committee writes:
As with all emerging technologies; the federal government must make sure that potential threats and risks are dealt with swiftly; however, we must also ensure that rash or uninformed actions don't stifle a potentially valuable technology," Committee Chairman Thomas Carper and Ranking Member Tom Coburn said in the letter addressed to the Secretary of Homeland Security Janet Napolitano.

But that is only the start of te trouble, a commerce, justice and science bill from July requests an FBI briefing on the subject of bitcoins and money laundering.
The Committee directs the FBI, in consultation with the Department and other Federal partners, to provide a briefing no later 120 days after the enactment of this Act on the nature and scale of the risk posed by such ersatz currency, both in financing illegal enterprises and in undermining financial institutions.

This is a very dangerous sign for Bitcoin. It means that the industry will get captured by the major players, who will play footsie with government, and neutralize the value of Bitcoin for black market operatios or the sector will be shutdown. And don't tell me you are going to hold Bitcoin anonymously if it is illegal to do so and there is jail time is part of the penalty. Bitcoin is headed for the deep dark caves of the black market, with possibly an above ground version that  won't be much different from a fluctuating checking account.


  1. Yeah, but here's the deal. Bitcoin isn't the only crypto-currency. If they go after Bitcoin specifically, another one will pop up to replace it.

    In order to effectively target crypto-currencies, the state would have to go after ALL crypto-currencies, which would cover a huge range of technologies.

    Things like Amazon credits, Facebook credits, video game currencies, etc.. would all be effected by such an attack by the state. I think they will have a lot of trouble trying to control these markets.

    Further, Bitcoin is global. The US can pass all the laws it wants, but that will not stop the currency from spreading. You don't need banks or currency exchanges to buy Bitcoins, they simply make facilitating the transaction easier.

  2. "Bitcoin is headed for the deep dark caves of the black market..."

    and that market is only a 10 trillion dollar market - and growing.

    Contrary to some businesses in the space, Bitcoin itself neither seeks nor needs state sanction.