Subpoenas issued by New York Department of Financial Services to companies involved in Bitcoin
In order to better understand the business practices of companies associated with virtual currency, the New York Department of Financial Services (with Benjamin Lawsky leading the investigation) has delivered subpoenas to Coinsetter, Coinbase Inc, BitInstant and the like, many, with well know investors, such as venture capitalist Marc Andreessen and the Winklevoss twins who recently announced that they had bought around 1% of Bitcoins in circulation to form a public investment fund.
The motivation behind this drive has much to do with the failure of virtual-currency companies to follow state money-transmission laws with questions around practices in anti-money-laundering, investment policies and consumer protection, being asked. In addition to this, criminal activity through money transmission is a real concern given that links to central government regulations do not exist.
While a subpoena does not indicate that the companies involved have done something wrong, the memo does state that "If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country's national security, but also the very existence of the virtual currency industry as a legitimate business enterprise."
Many of the companies involved have indicated that they are in support of Regulation and happy to cooperate with the initiative to make the business of virtual currency (particularly Bitcoin) safer and better regulated, but, the process of doing so in the U.S. is no piece of cake. Not only is registration with the U.S. Treasury Department's Financial Crimes Enforcement Network, a requirement; companies also need to be licensed separately with each state including costly bond expectations. This might explain why involved parties are reported to have been unavailable for comment.
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