U.S. Attorney General Eric Holder made the news recently in testimony that his office was now investigating high-frequency trading to see if it constituted insider trading. Now Holder is targeting Bitcoin and virtual currencies, although it is more of a warning rather than an attack.
The move on Tuesday comes in testimony before the U.S. House Committee on the Judiciary. Most of the commentary is around terrorism and national security. But Holder did dedicate a large segment to virtual currency, and he did specifically name Bitcoin.
Holder's testimony said:
More than ever before, the Department's law enforcement work today must contend with new and emerging technology, including virtual currencies such as Bitcoin. Virtual currencies can pose challenges for law enforcement given the appeal they have among those seeking to conceal illegal activity. This potential must be closely considered. We are working with our financial regulatory partners to account for this emerging technology. Those who favor virtual currencies solely for their ability to help mask drug trafficking or other illicit conduct should think twice; the Department is committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals' ability to move funds anonymously. As virtual currency systems develop, it will be imperative to law enforcement interests that those systems comply with applicable anti-money laundering statutes and know-your-customer controls.
So, while this is a "looking into it" approach, it does actually say that the Justice Department is committed to innovating alongside this new technology and is applying some of the same banking rules to it.
This all may sound bad for the secrecy aspects of Bitcoin and virtual currencies. The flip-side is that this could also be an indication that virtual currency is now here to stay.
Filed under: Banking & Finance