Yesterday afternoon, the Senate Homeland Security and Government Affairs Committee convened to discuss virtual currencies and the potential risks and value that they can add to both the US and international economies.
Chairman Tom Carper (D-DE) was the only congressmen to attend the hearing while seven witnesses testified, including law enforcement personnel and members of the Bitcoin community. \Despite significant worries that virtual currencies offer a fertile ground for criminals to anonymously conduct illicit activities, all the witnesses agreed that regulatory agencies are well prepared for the task.
“I feel confident that we have the tools that we need to address these threats and I feel confident that we have the will to address those threats, but we need to keep pace with what is going to come,” Mythili Raman, the Acting Assistant AG in the Criminal Division of the Justice Department, said.
A month ago, the Justice Department took down the Silk Road, a large online marketplace of illegal drugs whose transactions were conducted with Bitcoins, and arrested its alleged creator Ross Ulbricht. Yet, soon after, a new Silk Road popped up online and is currently active. Despite this setback, Raman asserted that it was important for the DOJ to take down the initial site as a signal to the criminal community that the anonymity of Bitcoin is not foolproof.
Since Bitcoin is a decentralized currency, there is no company in charge of it. However Patrick Murck, general counsel for the Bitcoin Foundation, testified as the representative of the bitcoin community. He agreed with much of what Raman and other law enforcement personnel said and was happy to hear that they saw the potential benefits of virtual currencies as well.
“I was expecting a good positive response from the law enforcement community ,” Murck said. “It was just very heartening to hear it spoken aloud and acknowledged that there are really positive legitimate uses for the currency and that they have the tools in place to interdict illicit activity and keep the bad actors out of the system.”
Just yesterday, Andy Greenberg at Forbes reported on the newest – and possibly scariest – use of Bitcoins: crowdfunding murder. “The Assassination Market” as it is known allows user to anonymously pledge money in the form of Bitcoins as a bounty towards the killing of major political actors and has a system in place so that the would-be killer can prove himself and receive the reward.
“When I say that Bitcoin is an experimental system right now, criminals are experimenting too,” Murck said of the market. “I think what they’ll find as they do very provocative things like that they might be in for a rude surprise down the road, because it seems like law enforcement has the ability to catch up to them.”
This was the overwhelming theme of the hearing. All the witnesses understood the potential for virtual currencies such as Bitcoins to attract criminals, but all had confidence that law enforcement had the ability and tools to prevent that from happening.
“We will remain vigilant. We intend to be as aggressive in the years to come as we have in the last several years,” Raman said in her closing statement. “Virtual currencies didn’t just sneak up on us…We assume that these kind of threats will continue to emerge and change and evolve and we intend to keep pace.”
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