June 26 (Reuters) – State regulators are warning virtual
currency exchanges and other companies that deal with Bitcoin
that they could be shut down if their activities run counter to
money transmission laws, the Wall Street Journal reported,
citing people familiar with the matter.
Banking regulators in California, New York and Virginia in
recent weeks have issued letters saying the companies need to
follow the state rules or prove that the rules do not apply to
them, the Journal said.
“Virtual currency firms inhabit an evolving and sometimes
murky corner of the financial world,” Benjamin Lawsky,
superintendent of New York’s Department of Financial Services,
told the WSJ in an interview.
“The extent and nature of their operations morph constantly,
so it’s important for regulators to ask the hard questions and
stay ahead of the curve in order to root out dangerous or
illegal activity,” Lawsky said.
Spokespeople for California banking department and Virginia
Bureau of Financial Institutions declined to comment to the
Journal. (http://link.reuters.com/wuq29t)
Most money transmission rules require companies to provide
detailed financial data, business strategy and information about
the management. States also usually require companies to put up
a bond of several million dollars.
Digital currency is electronic money that can be passed
between individuals without the use of the traditional banking
or money transfer system.
Bitcoin, which has been embraced by a number of venture
capitalists in Silicon Valley, exists through an open-source
software program that any users with enough skill and computing
power can access. It is not managed by a single company or
government. Users can buy bitcoins through exchanges that
convert real money into the virtual currency.
None of the parties could immediately be reached for comment
by Reuters outside of regular U.S. business hours.
(Reporting by Sakthi Prasad in Bangalore; Editing by Richard
Borsuk)
