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After subpoenas, Bitcoin companies start lobbying Washington

Published time: August 26, 2013 15:47
Image from flickr.com user@btckeychain

Image from flickr.com user@btckeychain

Less than one month after regulators in New York issued subpoenas to major companies involved with the Bitcoin digital currency, representatives for the emerging crypto-cash are launching a counter-campaign in Washington, DC.

A trade group representing the interests of the Bitcoin community is expected to meet in the United States capital on Monday with representatives from no fewer than seven governmental agencies including the Federal Reserve and Department of Homeland Security.

The Bitcoin Foundation, a group developed to advocate for the standardization, protection and promotion of the cryptocurrency, will make a presentation before representatives for a number of United States government agencies this week and then will field questions in order to help the the feds better understand how Bitcoin is being implemented by those looking for an alternative mean of buying and selling goods and services.

The meetings in DC come just two weeks after the New York Department of Financial Services served papers to Coinbase Inc, BitInstant and Coinsetter for information on antimoney laundering programs, consumer protection measures and investment strategies, the Wall Street Journal reported. At the time, Coinsetter CEO Jaron Lukasiewicz said the event provided "an opportunity for companies in our space to open up a much needed dialogue with regulators,” which will wage on in Washington this week between other members of the Bitcoin community and federal reps.

Introduced in 2009, Bitcoin has expanded in popularity in recent years as a way of doing business on the Web that provides strong anonymity by means of heavy encryption. According to the most recent estimates, the economy supported by Bitcoin is now at more than $1.4 billion and looks to be only growing. Should the government move forward with regulating the currency, however, the foundation and other Bitcoin advocates fear the repercussions will be disastrous.

"The federal government has taken an active interest in understanding Bitcoin," Marco Santori, chairman of the foundation's regulatory affairs committee, told The Verge. "As such, the goal of these initial meetings is education about the Bitcoin protocol specifically and distributed finance in general. The Foundation is committed to establishing itself as the first resource for government policymakers."

And as some federal agents explore that interest with meetings on the Hill this week with the foundation’s major players, others are going another route. Earlier this month, the US Senate Committee on Homeland Security and Governmental Affairs sent a letter to the DHS asking homeland security to identify just exactly what it plans to do about Bitcoin, warning that "near anonymous and decentralized nature has also attracted criminals who value few things more than being allowed to operate in the shadows.”

"As with all emerging technologies; the federal government must make sure that potential threats and risks are dealt with swiftly; however, we must also ensure that rash or uninformed actions don't stifle a potentially valuable technology," Committee Chairman Thomas Carper and Ranking Member Tom Coburn said in the letter to DHS Sec. Janet Napolitano.

In addition to the Fed and the IRS, representatives from the Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Internal Revenue Service, Federal Bureau of Investigation and Secret Service are all slated to meet with the foundation this week, according to the Wall Street Journal.

Patrick Murck, general counsel for the foundation, told the Journal’s Robin Sidel that his group hopes the opportunity to meet with federal officials will help both sides "move forward to the same safe regulatory environment."

"We understand there are specific challenges that go along with Bitcoin and there is a lot of potential and we want to work with them to chart a safe course," he said.

Four representatives for the foundation will take part in the talks, including Murck, Santori, legal defense committee chairman Brian Klein and board chairman Peter Vessenes. Following a meeting with federal agencies on Monday, the four representatives plan to meet with lawmakers on the Hill to brief them on all things Bitcoin.