Bitcoin can expect another shock to the system as a variety of US regulatory agencies appear to be gearing up for a big action against Bitcoin related companies.
CoinFire reports that letters from various agencies including the SEC, FinCEN, and the IRS have gone out to several large Bitcoin companies requesting what amounts to a records dump. Many of the largest companies have come under fire within the Bitcoin community for trying to work with regulators, and even requesting ‘regulatory clarity.’ Now they may be getting what they asked for, but in an unwelcome way. After providing the regulators and enforcers copies of all their records, the enforcers will be surely be able to piece together myriads of violations, stunting the growth of these companies and with them the growth of the US Bitcoin economy.
The report presented by CoinFire further states that it appears that hundreds more letters are being prepared, making this effort look to be a frontal assault on Bitcoin. Just this week, after months of effective silence on the matter, FinCEN came out with a ruling that exchanges and payment processors will need to be registered money transmitters. Armed with harsh interpretations of existing financial rules, FinCEN, the IRS, and a handful of other alphabet agencies can do much both the persecute Bitcoin businesses and tarnish the image of Bitcoin in the minds of the public.
What we at Bitcoin Warrior find as disturbing as anything else is a clause in the letters requiring businesses receiving them to keep them confidential. The businesses may retain counsel, but may not inform anyone else that they have received these document requests. This may be normal operating procedure, and may be designed to keep from tipping off other businesses with illicit operations under investigations about what kinds of actions might be taken against them. However, when we have had months of calls for open discussions about reasonable regulations and oversight, secretive and threatening demands for all records feels more like a terror tactic than customer protection.
It is our position that sensible regulation of the intersection between fiat and cryptocurrency is both inevitable and necessary. People, by nature, work in their own best interests and do not always play fair. It is the government’s job to help craft the rules we all play by and then enforce those rules impartially. Unfortunately, the same entities now seemingly gearing up to assault Bitcoin businesses have not had the same zeal in going after the rampant and obvious crimes being committed on Wall Street or in Washington. If they did, then there wouldn’t be a need for a disruptive currency like Bitcoin as people would be confident in the current system.
If this is in fact the first step to a general regulatory assault on Bitcoin, we have no doubt the it will dampen the prospects of US bitcoiners. We also have no doubt that the system is resilient and will continue to grow internationally. Further, as the US continues to lose international clout, its hardline stance toward the currency may further serve to isolate it internationally.