After shutdown of Liberty Reserve in May this year FinCEN proposed an “Imposition of Special Measure Against Liberty Reserve S.A. as a Financial Institution of Primary Money Laundering Concern”. The primary purpose of the ‘Special Measure’ being to cut Liberty Reserve off from the banking system.
FinCEN noted Liberty Reserve’s irrevocable transactions and lack of ID verification as evidence that “Liberty Reserve’s system is structured so as to facilitate money laundering and other criminal activity,” these comments worried the digital currency community and was likely what scarred off many of their banking partners.
On the 19th, the Bitcoin Foundation responded to FinCEN’s proposed special measure urging them to clarify that not all virtual currency transactions are inherently suspect.
From the letter…
“the Bitcoin Foundation does not take issue with the imposition of special measures against Liberty Reserve. Rather, the Bitcoin Foundation is filing these comments to urge FinCEN to clarify statements made in the Proposed Rule and the underlying Notice of Findings that could be misinterpreted to suggest that virtual currency transactions in general are inherently suspect.”
“the Bitcoin Foundation is concerned that the statements in question may be misinterpreted to suggest that all virtual currency operators are inherently suspect. In particular, the Bitcoin Foundation is concerned that the statements will be misread by the financial institutions implementing the final rule adopted in this proceeding (the “Final Rule”) to suggest that virtual currencies in general should be subject to a higher degree of scrutiny, and the chilling effect this could have on the still nascent bitcoin industry. “
The foundation asks for 3 specific statements from FinCEN…
- Any Final Rule Should Rely on Established Terms and Definitions
- Any Final Rule Should Emphasize Liberty Reserve’s Activity as the Sourceof Concern, Rather than any Particular Attribute of Virtual CurrencyGenerally
- Any Final Rule Should Clarify that Irrevocable Transactions May Serve Legitimate Purposes
Read the Foundation’s response in its entirety here.