U.S. Top Cop Warns of Digital Currency Dangers (April 9, 2014)
More federal regulations might be on the way for digital currencies after U.S. Attorney General Eric Holder told lawmakers of his concerns about Bitcoin and other digital currencies as potential tools for criminals.
“Those who favor virtual currencies solely for their ability to help mask drug trafficking or other illicit conduct should think twice,” Holder said during a hearing before the House Judiciary Committee yesterday. The hearing was not to specifically focus on decentralized digital currencies, rather the topic came up during a review of Justice Department operations.
“The department is committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals’ ability to move funds anonymously,” he said. “It will be imperative to law enforcement interests that those [digital currency] systems comply with applicable anti-money laundering statutes and know-your-customer controls.”
In related news, Rep. Steve Stockman (R-Texas) announced he plans to introduce legislation, the Virtual Currency Tax Reform Act, that would change the tax status of digital currencies from property to currency, thus requiring Americans to pay sales taxes on digital currency transactions. The draft bill reportedly directs the IRS to treat virtual currencies as currency for tax purposes and defines virtual currency as “a digital representation of value that functions as a medium of exchange, a unit of account and/or a store of value.” The bill would fly in the face of a recent ruling by the IRS stating that digital currencies are property subject to taxation rules for property transactions.
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