Authorities urge for more oversight of virtual currency

Manhattan District Attorney Cyrus Vance Jr. recently referred to Bitcoin—an increasingly popular form of digital currency—as the "Digital Wild West." Vance is arguing for state regulators to step in and provide oversight for this new technology, which is attracting real-life criminals who are committing financial fraud online.

In 2013, an undercover federal agent opened an account at Liberty Reserve, a Costa Rica-based centralized digital currency service, under the name Joe Bogus, with clearly fake personal information, his given address being 123 Fake Street. But to the multi-billion dollar banking operation, none of that mattered. The agent was able to transfer funds with absolutely no interference. This was part of an investigation into the larger implications of digital currency and whether or not it can be adequately monitored by law enforcement.

Authorities who have investigated both Liberty Reserve and Silk Road—a massive black market for narcotics and other illegal substances—say that anonymity provided by digital currency makes it attractive to all kinds of criminals. At a hearing last month held by the New York State Department for Financial Services, Deputy U.S. attorney Richard Zabel said that criminals can very easily conceal their identities, illegal activities and the money they make, which is why the government needs stronger regulations in place.

Benjamin Lawsky, who is New York State's chief financial regulator, says he is currently considering new measures that would require businesses that use virtual money to get a Bitilicense, and comply with guidelines that all of their customers are who they claim to be online. These regulations would make it easier to prevent any money laundering actions.

The international community is entering a new world of digital money, and regulations are going to have to be updated to keep with the changing times.

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