Virtual Currencies Continue to Hog the Limelight!
Change is Coming to Virtual Currencies Regulation
Virtual currencies straddle the lines between legitimate operations and unregulated operations. Recently, the Financial Crimes Enforcement Network took action against a Californian virtual currency company known as Ripple Labs, Inc. According to the terms
of the punitive measures, the virtual currency company has to pay $700,000 for having violated the money transmitter rules of
FinCEN. While Ripple Labs, Inc has been a money services business, it failed to register with FinCEN, among others. Issues such as Anti-Money Laundering measures were not complied with, neither were the requirements
of the Bank Secrecy Act. Owing to these legislative measures, new regulatory actions have now come into being.
How Law Enforcement Perceives Virtual Currencies
Virtual currencies have been under the spotlight for several years, but this latest action by FinCEN is a step in the direction of enforcement of the industry. Regulation of the virtual currency market has long been a thorn in the side of the Federal government,
and regulators are eager to put measures in place to legislate the industry. The Federal government has published guidance for FinCEN which requires virtual currency businesses to register as money services businesses with the Financial Crimes Enforcement
Network. For those virtual currency operations who are consider themselves to operate in a grey area, FinCEN has defined money services businesses broadly.
Such is the scope of the definition, that FinCEN considers any money or currency transfer from one person to another as being part of a money services business. But the action is not only taking place at Federal level. State legislators are taking steps
towards implementing regulations vis-à-vis virtual currency. For the most part, regulators are of the opinion that state legislation is an unnecessary exercise given the Federal regulations set to be put in place. But present laws do not prevent states from
exercising their right to implement legislation. Owing to state laws, the penalties for operating outside of the law can result in severe civil and criminal penalties.
Goldman Sachs Sees Value in Circle Internet Financial
Jeremy Allaire’s bitcoin start-up Circle Internet Financial has already raised an incredible $50 million from a group of investors including the Goldman Sachs Group. The virtual currency now has added meat as it attempts to receive greater acceptance among
consumers. For Circle Internet Financial, there is tremendous excitement about the investment potential and the capabilities of the evolving finance firm. The $50 million investment bolus comes in addition to $26 million that was generated during 2013/2014.
As a result, Circle Internet Financial will soon be able to offer services in USD, not only
Now, clients will be able to maintain accounts in dollars without having to worry about the volatility of bitcoin fluctuations. Since bitcoin operates outside of central bank control, it has the capacity to forever change how money is stored and by keeping
costs as close to zero as possible. In terms of definitions, Circle Internet Financial does not describe itself as a bitcoin operator – rather it states that it leverages bitcoin technology for instant payments and money transfers. Goldman Sachs believes that
virtual currencies have the potential to turn the $1.7 trillion global payments processing industry on its head by reducing costs for consumers and merchants alike.