Tags: virtual | currency | Calvery | Senate

Senate Committees Look at Alternative Currencies — Part I

By    |   Wednesday, 20 November 2013 01:42 PM

A Senate committee chairman and two Senate subcommittees held hearings on alternative currencies, which have been in the news quite a bit lately.

At the Senate Committee on Homeland Security and Governmental Affairs, Chairman Tom Carper, D-Del., presided alone at a hearing titled "Beyond Silk Road: Potential Risks, Threats and Promises of Virtual Currencies," because senators were still straggling back to Washington on a Monday afternoon.

At the Senate Banking Committee, the subcommittee on National Security and International Trade and Finance, chaired by Mark Warner, D-Va., and the subcommittee on Economic Policy, chaired by the Sen. Jeff Merkley, D-Ore., held a joint hearing entitled "The Present and Future Impact of Virtual Currency."

In this series of three articles, the first will cover the testimony of federal regulators who appeared on the first panel of each hearing, the second article will cover the industry witnesses at the Carper hearing and the third article will cover the industry witnesses at the Warner-Merkley hearing.

A star witness at both hearings was Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network (FinCEN) at the Treasury Department. Calvery is a former all-American basketball player from George Washington University and a former official of the Justice Department. She was joined at the Carper hearing by Mythili Raman, acting assistant attorney general for the Criminal Division of the Justice Department, and Edward Lowery III, special agent in charge of the Secret Service, formerly a unit of the Treasury Department, now located at the Department of Homeland Security.

At the Merkley hearing Calvery was joined by David Cotney, the banking commissioner of Massachusetts.

The general theme of the hearings was that alternative currencies such as Bitcoin, while still a very small factor in international commerce, are growing in prominence because some businesses have begun to accept them for payment and because some criminals who employed Bitcoin as a means of achieving anonymity have nonetheless been arrested and prosecuted for various crimes, including one instance of murder for hire.

The emphasis was on bringing these currencies under the existing scheme of currency regulation, including anti-money laundering suspicious activity reporting, and record keeping. Senators have been careful to say that they do not want to foreclose whatever opportunities virtual currencies offer for economic growth, but they want to make sure the industry is regulated, in order to stifle the dark side of the business.

In his opening statement, Carper announced that the Committee has been conducting an investigation of virtual currencies for several months in order to examine the risks and benefits and to consider how the industry can be regulated through cooperation among federal agencies.

The Calvery statement is particularly useful for its diagram of how transactions are conducted and its thorough explanation of the plethora of laws, administered by myriad agencies and state authorities, that apply to payment services, and an explanation of how the agencies broke some high-profile cases, such as Silk Road drug market and Liberty Reserve digital currency service.

However, even Calvery was careful to keep this activity in perspective as tiny compared with the scope of the banking industry.

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A Senate committee chairman and two Senate subcommittees held hearings on alternative currencies, which have been in the news quite a bit lately.
Wednesday, 20 November 2013 01:42 PM
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