Virtual Currency Exchange: State Regulators Warn of Business Closures for Those Ignoring Money Transmission Rules
Virtual currency exchange businesses and companies dealing with Bitcoin are being warned they could be closed if they run afoul of laws governing money transmission, according to a recent Wall Street Journal article.
Financial regulators in California, Virginia and New York states have recently published letters reminding businesses in these sectors that they must adhere to state rules or provide proof the laws aren't applicable to their companies, reports the newspaper.
"Virtual currency firms inhabit an evolving and sometimes murky corner of the financial world," said superintendent of New York's Department of Financial Services, Benjamin Lawsky, in an interview with the Wall Street Journal. "The extent and nature of their operations morph constantly," Lawsky explained, "so it's important for regulators to ask the hard questions and stay ahead of the curve in order to root out dangerous or illegal activity."
Silicon Valley venture firms have recently become interested in Bitcoin, an open-source software program accessible to anyone. With a lack of central management or operation, Bitcoin users may purchase the currency (known as bitcoins) via any virtual currency exchange that converts real currency into the virtual coin.
Funds transferred electronically between entities without resorting to traditional currency transfer or banking methods are known as digital currency.
Specific financial information, including a business's strategic plan and management details, are typical data required by most currency transmission rules. In addition, most states also require a bond provision from the business of at least a few million dollars.
Spokespeople representing the state of California's banking department as well as the state of Virginia's Bureau of Financial Institutions declined comment to the Wall Street Journal.
Efforts to contact each of the noted parties for comment were unsuccessful by Reuters after normal U.S. business hours.
Produced by IBM's Midsize Insider, based on Reuters reporting
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