Bitcoin and Other Virtual Currencies Finally Get Some Regulation

[Bob]

Companies that distribute and exchange Bitcoin will now be subject to the same rules as Western Union. The hope is to crackdown on Bitcoin-related crime.

Regulating virtual currencies is tricky because it's hard to do it without admitting that they're legitimate in some way. But given the surge in Bitcoin's popularity—and its utility as the currency of choice for drug dealers, gun runners, and other baddies—the US government had to do something.

The new "guidance" issued by the US Treasury Department's Financial Crimes Enforcement Network is very careful to draw a line between real and virtual currency. The real stuff is official government tender:

FinCEN's regulations define currency (also referred to as "real" currency) as "the coin and paper money of the United States or of any other country that 1) is designated as legal tender and that 2) circulates and 3) is customarily used and accepted as a medium of exchange in the country of issuance."

Whereas virtual currency is something that sometimes acts like currency but isn't legally accepted:

In contrast to real currency, "virtual" currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses "convertible" virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.

read the rest here....

 

[Lucas]

It was bound to happen, you think politicians don't want some of that pie too?

 

[intradox]

It's commonly used for anonymous money transfers like bob states, Silk Road uses it for drug trade and it's now becoming common with regular companies as an alternative form of payment to Paypal.