The Daily Caller reported over the weekend about “sources on the Hill told the D.C. said various members of Congress are looking at the compliant capabilities of AML Bitcoin, which is a compliant digital currency. Bitcoin is the most famous digital currency, or crypto-currency, and has skyrocket in value over the past few weeks.” A digital currency that is compliant with anti-money laundering laws would bring the digital currency for services and product transactions into the mainstream of American life.
The report indicates that this new AML Bitcoin currency would be compliant with various regulations and laws that prevent money laundering. The first would be something called “Know Your Customer (KYC) regulations and laws that guide a business into verifying the identity of clients. These regulations are tough to follow and costly, therefore there are many companies set up to help with compliance in these complicated regulatory matters. The cost of non-compliance is high and if a bank, or digital currency, is found to be in non-compliance they can face massive fines. And the problem is rampant in the financial sector.
On January 5, 2014, in a blog post on Thomson Reuters they reported that the KYC regulations are important on a global scale to protect against not only money laundering, but also identity theft and the financing of international terrorism. “According to the International Monetary Fund, incidents involving money laundering, compliance violations of KYC regulations, and other breaches are estimated to cost between two and five percent of the world’s gross domestic product.” The report cited a laundry list of regulation including anti-money laundering (AML), anti-bribery (ABC), tax transparency like FATCA, the Dodd-Frank law passed in the wake of the Wall Street meltdown in 2008, Markets in Financial Instruments Directive (MiFID) and European Market Infrastructure Regulations (EMIR). This alphabet soup of laws and regulations are difficult to comply with, yet the AML Bitcoin initiative will implement tough standards to stop the illegal use of these digital currencies as best as they can.
AML compliance is tough, yet beneficial to bring digital currencies out of the shadows. The idea of AML Bitcoin is brilliant. It has been tried on a smaller scale, but the Daily Caller report indicates that this is a serious effort where the creators of the coin are seeking Congress to pass legislation to protect from harassment from the Department of Treasury. The fact that they have got the attention of several members of Congress also shows that this effort is very likely to be successful.
The problems with digital currencies, also known as cryptocurrencies, has been well documented. Bitcoin has been used in human trafficking according to the New York Post. Bitcoin has been used to finance terrorism according to the Wall Street Journal. Fortune reported last month that a Russian based bitcoin site BTC-e was fined $110 million for money laundering. Although there have been numerous reports of the illicit use of digital currencies, they are booming right now and are viewed as the future preferred method to transfer value.
While many libertarian leaning conservatives have been disappointed at the slow pace of this Congress in reforming health care and cutting taxes, this initiative to facilitate AML Bitcoin should give voters some hope that this Congress can do some good. A streamlining of the way people pay for goods and services would be a massive government stimulus. Just like tax reform would remove many of the burdens on filing taxes, a streamlining of the way people pay would make it quicker and less complicated to pay for something. That will provide a massive stimulus to the economy. I am sure that the banks will marshal everything they must lobby cronies in Congress to block any legislation that might free up and open up the market for currency.
AML Bitcoin may be the future of how we pay for goods and services in a way that does not allow the black market of money laundering and terrorist funding to use the same services. As we all know from every television show and movie about drug dealers, they love cash because it is easy to use for illicit purposes, yet nobody would ever argue that we should abolish cash. Same can be said of digital currencies that make best efforts to stop illicit use of their services. AML Bitcoin seems like the future of money and that future seems like it will be a reality very soon.