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US regulators develop bitcoin rulebook

Published time: May 19, 2014 17:17
Reuters / Jim Urquhart

Reuters / Jim Urquhart

A group of US state regulators is working to develop the first ever bitcoin rulebook, stating that they hope to protect those who are using the virtual currency by introducing proper regulation.

Many US companies are now allowing customers to pay for goods and services with the virtual currency.

“We may be looking at some type of model definitions, or model laws or regulations, and very likely recommendations to either our federal colleagues or to Congress,” David Cotney, Massachusetts commissioner of banks, told Reuters during a public hearing about bitcoin on Friday.

Cotney took up his position as head of the new nine-member Emerging Payments Task Force in February. The collective has granted itself a year to complete the task of establishing the guidelines.

Bitcoin was denied currency status by the IRS in May, meaning that taxpayers must treat bitcoin as property for federal tax purposes.

Because bitcoin is not regulated by the federal government, US constituent states may be facing a labyrinth of rules to govern its usage.

The task force hopes to clarify operators that need to be regulated and those that don’t, Cotney told the agency.

“Who's in and who's out? So if we can offer that [it] would be a...big step,” he said. Cotney's group also examines other new payment technologies, including online money transfer service PayPal and mobile phone payment services.

From May 9, US politicians could begin accepting bitcoin donations. In February, US-based CheapAir became the first online travel agency to accept bitcoin as a form of payment for flights and hotel bookings.

However, recent disruptions have thrown the currency into the limelight. Mt. Gox – Tokyo’s most well known bitcoin exchange - filed for bankruptcy in February after losing some $US650 million worth of clients’ bitcoins. China then shut down two major trading platforms at the beginning of May.

Regulators say they want to ensure that usage of the cryptocurrency remains secure.

A member of the task force, New York-based Benjamin Lawksy, stated in January that his department was devising a “BitLicense” system in which California has expresed interest.

Many countries, including Russia, have warned against using bitcoin, while Denmark and China have banned virtual currency deposits.

Comments (10)


Veta Maria 20.05.2014 19:11

if one study the "autopsy" of the dollar can easily observe that its death is due its virtualization, meaning that it was backed by nothing and multiplied in excesive numbers. only gold and silver can keep a value stored for multiple generations and thats that. only slaves are working for nothing, where nothing is any currency except for gold and silver. the one who does not recognize a mistake is bound to do that mistake again.


Todd Bethell 20.05.2014 10:07

Alanna Skelly, your hostile attitude toward liberty and your belief that government can and should ban bitcoin is exactly why bitcoin was created. The only way bitcoin can be stopped is to crush the the liberties and lives of those who choose to exchange legal goods and services with bitcoin or save for retirement by investing in bitcoin. Regardless if anyone has ever been or will be harmed.
Is that really what you stand for?
Todd Bethell, CFM, MBA
Bitcoiner since April 2011


Tord Jansson 20.05.2014 06:52

@Alanna Skelly: It saddens me to hear your bashing of Bitcoins, since cryptocurrencies, of which Bitcoin is the foremost, is the greatest economic invention for years. The positive impact that cryptocurrencies will have on society, democratization of capital and the economy at large far outweighs the greatly exaggerated negative impact you refer to.
The current, international banking regime that is the gatekeeper of money flow is an expensive, dated institution that taxes society, hinders innovation and creates economic bubbles. Bitcoins will liberate capital flow, like the internet liberated the flow of information.

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