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US state regulators investigate virtual currencies; Mt. Gox chief quits Bitcoin Foundation

24 February 2014  |  7345 views  |  1 bitcoins

A collection of US state financial regulators has become the latest body to launch an investigation into bitcoin and other virtual currencies. Meanwhile, the boss of troubled exchange Mt. Gox has resigned from the board of the Bitcoin Foundation.

The Conference of State Bank Supervisors (CSBC) says that its new emerging payments task force will look into how things such as crypto-currencies affect consumer protection and state law.

The move has been welcomed as an "important step" by US senator Tom Carper, chairman of the Homeland Security Committee, which carried out an investigation of virtual currencies last year.

"As virtual currencies, like bitcoin, and similar technologies continue to be increasingly utilized, we have to ensure that governments are adequately protecting consumers and addressing lawbreakers without hindering innovation," says Carper.

The CSBS task force is made up of nine state regulators, including New York State Department of Financial Services superintendent Benjamin Lawsky, who recently held his own hearings into virtual currencies and has proposed the introduction of 'BitLicenses'.

The members will talk to stakeholders - including fellow state regulators, federal regulators, industry participants, and other experts - as they bid to get a grasp of how new entrants and technologies affect the stability of payment systems and how to weave them into the financial regulatory fabric.

Charles Vice, chairman, CSBS, says: "State regulators welcome a robust and focused dialogue about the benefits and risks of innovations to payment systems. We seek an environment where technological innovation can be developed, but also regulated in a clear manner."

Separately, the fallout from the MT. Gox fiasco continues, with chief executive Mark Karpeles quitting the board of the Bitcoin Foundation, effective immediately.

Mt. Gox, the world's best known bitcoin exchange, suspended withdrawals earlier this month, blaming a bug in the bitcoin software that makes it possible to alter transaction details.

This caused a dispute with the Bitcoin Foundation, which hit back, insisting that the problem was down to the exchange's own "unpreparedness" for the "transaction malleability" issue.

In a brief statement on Karpeles, the foundation says: "We are grateful for their early and valuable contributions as a founding member in launching the Bitcoin Foundation."

Nearly three weeks after Mt. Gox withdrawals were suspended, users can still not access their funds. Bitcoin's value on the exchange has plummeted to $149, according to Bitcoin Charts, and the issue seems to be dragging down its price on other platforms: it currently trades on Bitstamp at $576, down 14%.

Meanwhile, furious Mt. Gox users have descended on the company's headquarters in Tokyo demanding their money, forcing the firm to move offices, citing "security problems". It has also deleted all of its tweets from its official account.

Karpeles is the second high profile Bitcoin Foundation board member to leave in recent weeks: last month BitInstant CEO Charlie Shrem quit after being charged with money laundering related to an alleged Silk Road scheme.

Comments: (1)

Neil Crammond
Neil Crammond - trader - london | 25 February, 2014, 09:53

bitcoin no more than a glorified "ponzi" ?  

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