As Bitcoin gets an increasing amount of attention from the government, the entrepreneurs and advocates behind the digital currency are getting ready for their close-up.
They are hiring lawyers skilled in navigating the regulatory gauntlet, political operatives who can deal with the curiosities and concerns of Congress, and former government officials who can give the fledgling industry a good housekeeping seal of approval.
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“It is still very much the early days here,” said Jeremy Allaire, chief executive of Bitcoin startup Circle. “There’s just got to be a lot more education and understanding among policymakers and regulators.”
On Thursday, Allaire announced former CFPB Deputy Director Raj Date has joined Circle’s board. With state and federal officials already expressing concerns that Bitcoin could be used to scam consumers, snagging Date — the first person Elizabeth Warren hired when starting up CFPB — is a coup.
(Also on POLITICO: FEC poised to allow Bitcoin campaign donations)
Bitcoin has moved from a head-scratching curiosity in Washington to an issue both regulators and lawmakers say they need to better understand and decide how to handle. Evangelists for the digital currency and those hoping to turn it into a moneymaking enterprise are bringing on help in D.C. and elsewhere to convince officials they can adapt to existing consumer-protection and money-laundering rules and don’t need a new set of standards.
Next week, the first of a series of hearings on digital currencies gets under way. Allaire will testify at a hearing Monday at the Senate Homeland Security and Governmental Affairs Committee, and the Senate Banking panel has scheduled a hearing for Tuesday.
The first question for many lawmakers is: What is Bitcoin?
Bitcoin is a digital form of money that, like cash, can be used to pay for goods and services or send funds to someone online, but it is not controlled by the government. Bitcoin is one of a number of digital currencies. Unlike using a bank account or a credit card, Bitcoin moves on a decentralized network and is subject to lower fees.
(Also on POLITICO: First ATM turns bitcoins into cash)
It offers users discretion in how much identifying information they want to attach to a transaction, but all transactions are publicly recorded in a so-called block chain.
The semi-anonymity offered by the digital currency opens the door to concerns about whether it can be used to illegally launder money and buy drugs. At the same time, the protocol offers a new way to move money around the world without traditional financial institutions.
Interest in Bitcoin has exploded this year. The value of a bitcoin on the Mt.Gox exchange has risen from around $12 a year ago to above $400 Thursday.
With that explosion in interest has come increased government scrutiny.
In March, Treasury’s Financial Crimes Enforcement Network released guidance outlining which digital currency firms would need to register with the federal government. In August, New York Financial Services Superintendent Benjamin Lawsky subpoenaed a number of Bitcoin businesses and investors. Lawsky announced on Thursday that his office is considering a “BitLicense” for digital currency transactions that would include anti-money laundering and consumer protection requirements.
This summer, Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-Del.) and ranking member Tom Coburn (R-Okla.) asked several federal agencies and departments to explain how they are policing digital currencies.
The committee’s hearing Monday has become a milestone for the Bitcoin community’s growing Washington efforts. Carper, in a letter to the Government Accountability Office last week, said the technology was attractive to entrepreneurs and investors but posed some “serious concerns and risks.”
Officials from the Treasury, Justice Department and the Secret Service are scheduled to testify at Monday’s hearing.
source: http://www.politico.com/story/2013/11/bitcoin-gets-ready-for-the-government-99893.html#ixzz2khb2HMqX
