NYT DealBook: Facebook Stock Not So Different Than Bitcoin

The title of Rob Cox's post says it all, except perhaps for the money laundering angle.  Easier to launder money using Bitcoin or put it differently, I'm not aware of any federal criminal cases where prosecutors are alleging money laundering through the use of Facebook stock. 

Doubling Down: Bitcoin Evangelist Won't Back Down

Dealbook reports that Charls Shrem, one of the most visible advocates of Bitcoin, has not backed down from his support of the virtual currency, despite his arrest and accusations of money laundering.     The post mentions Mr. Shrem's dreams of a Bitcoin debit card, different business such as a private charter jet company or a bar taking Bitcoin.  In particular he noted that "Bitcoin really allows you to have such a global life — it allows you to be able to move anywhere within days if you want to."  Let's see, I can travel internationally now at a moment notice, use debit cards, buy drinks and charter a jet (if I had the money).  So what exactly does Bitcoin provide that real currencies cannot? 

How does Bitcoin help criminals? Let him count the ways.

Dealbook reports that law enforcement officials testify as to how virtual currencies like Bitcoin help criminals. 

Access to capital and banking services to become restricted

As expected, certain types of people and entities will find limited access to capital and banking services.
WSJ reports that U.S. banks like JPM are ending banking relationships with potentially troublesome customers like virtual currency firms and legal marijuana businesses rather than put up with the additional compliance work involved.  Will this drive these types of capital flows underground?  

Purpose of Bitcoins to avoid paying bank fees?

Dealbook reports on the hearings today called by NYS's top financial regulator, Benjamin Lawsky.  Reading the post it appears that the major benefit for Bitcoins as provided by those testifying, was to avoid bank fees and move "money" around faster. But there are reasons for why money should not move so fast. Why is a person's life improved if they can move money from one account to another in 2 days as opposed to 3?  And there is a cost to ensure that the movement of capital is not being used to facilitate illegal activities. 

Bitcoins: Bonanza for the regulators?

Given all the noise about Bitcoins I can't resist another post today.  Regulators are apparently jostling to be among the first to regulate Bitcoin businesses as money transmitters following the announcement by the U.S. Treasury Department’s Financial Crimes Enforcement Network.  Assuming that no federal regulatory framework is proposed, I expect a handful of the states looking for "impact regulation" will be the first to propose specific regulations.  But then I also expect that eventually, the federal government will preempt all state laws and regulations involving Bitcoin. Until then, Bitcoin will provide a rich source of laws and regulations (and potentially fees and taxes) for state governments.

You say marijuana, I say Bitcoin?

According to Bloomberg, the SEB AB Bank has refused to set up Bitcoin accounts due to concerns about money laundering.   The news about Silk Road getting shut down and prominent Bitcoin speculators being arrested for money laundering comes at the same time that legal marijuana businesses appear to have no access to banks due to the same money laundering concerns.  Except of course that legal marijuana business can transact in cash whereas Bitcoin only has value if it can be converted into another currency.  Unless one were to shop at Overstock.com where apparently they still take Bitcoins, money laundering concerns be damned!  Does anyone know if Overstock's Vice Chairman, Jonathan Johnson, is as worried about Bitcoin and money laundering as he is about gay marriage?