Former SEC chairman Levitt becomes advisor to bitcoin firms

Former SEC chairman Levitt becomes advisor to bitcoin firms

Former US Securities and Exchange Commission chairman Arthur Levitt is taking on advisory roles at bitcoin firms BitPay and Vaurum. He enters the cryptocurrency industry as it digests rulings from regulators that could see many companies classed as money transmitters.

Levitt, who is the SEC's longest serving chairman, will work with payment processor BitPay and institutional exchange Vaurum to help "monitor business practices" and develop ways to market the new currency.

Levitt says bitcoin is "fascinating," adding: “I hope to help BitPay and Vaurum blend their new business models with core monetary methods and transparency practices in order to ensure their long term success.”

Getting an industry heavyweight onboard is a boost for BitPay and Vaurum, which are both working hard to establish themselves, and bitcoin, as legitimate players in the financial system.

BitPay has established itself as one of the world's leading bitcoin payment processors, used by some 40,000 businesses, and has already hired Tim Byun, former head of AML for Visa, as chief compliance officer.

However, the firm could face a new headache thanks to a ruling from the Financial Crimes Enforcement Network (FinCEN), which suggests that bitcoin payment processors could be considered a "money transmitter" under the Bank Secrecy Act.

Responding to a letter asking for an administrative ruling from a firm planning to facilitate bitcoin transactions between merchants and customers, FinCEN writes that it "would be a money transmitter and should comply with all risk management, risk mitigation, recordkeeping, reporting, and transaction monitoring requirements corresponding to such status".

According to a CoinDesk report, BitPay and others have previously suggested that they are not subject to FinCEN rules because they only accept and transmit funds necessary to sales.

In a second ruling, FinCEN reaches a similar conclusion in response to a query from a company planning to set up a convertible virtual currency trading and booking platform, deciding that it too would be a money transmitter.

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