Bitcoin as we know it could soon be over.
The feds are looking at regulations that could erode two of the most popular and controversial aspects of digital money — anonymity and its unregulated status, three enforcement officials said at a Manhattan conference Tuesday.
“One of our major concerns is that we don’t know who has access to these virtual currencies, and who is using them,” Sujit Raman, an assistant deputy attorney general at the Justice Department, one of three regulators of the crypto-asset, said during a panel discussion.
The concerns about crypto-assets funding terrorism and money laundering are fueling Justice’s push to get trading platforms and others to collect information on who’s buying and selling the currencies — much like banks do with stocks and bonds, Raman said.
Virtual currencies like bitcoin have mostly been designed to hide the identities of both the buyer and the seller. For Washington, that’s a big problem — and shedding light on crypto-asset movements could be a bitter pill for cryptocurrency enthusiasts to swallow.
“For us to have more visibility into that is very, very important,” Raman added.
“Participants want to know who is on the other side of the transaction,” said James McDonald, head of enforcement at the Commodity Futures Trading Commission. “They want to know that the other entities are going to be playing by the same rules.”
Later during the panel, Robert A. Cohen, chief of the Securities and Exchange Commission’s new cyber unit, pivoted to talking about smaller, private batches of digital money that are issued through so-called “initial coin offerings.”
While some companies — including one as large as Kodak — have started to issue their own private currencies through ICOs, there are those who think the coins should be exempt from securities regulations.
Earlier this year, SEC Chairman Jay Clayton had said most of the ICO tokens he’s seen would qualify as securities — but lawyers representing those companies have held out hope that they will still escape regulation.
Cohen, however, didn’t seem to offer any relief.
“If a person is raising money for a business, or an entrepreneurial idea, and people are giving money to that person with the hope that, if they’re successful, they’re going to make a profit off the efforts of others, that’s a security. That’s raising capital for a business,” he said.
Representatives from the three government bodies that regulate bitcoin and other virtual currencies said they’re working together to bring sunlight to some of the darkest parts of the market.