Bitcoin woos Washington to ensure lawmakers don’t kill industry

Source: Bloomberg Source: Bloomberg

Bitcoin advocates entered Washington a year ago with the shadow of a federal criminal investigation cast over the virtual currency industry.

Their first mission: Win over, or at least not alarm, the U.S. Treasury Department’s Financial Crimes Enforcement Network, called Fincen.

“Our first reaction, particularly when I was on the law enforcement side, when we had something new was ‘Huge risk! Huge risk for money laundering. It’s bad!’” Fincen Director Jennifer Shasky Calvery said in an interview this week. “But we’re the Department of the Treasury, we can’t have that knee-jerk of a response.”

In March, Fincen issued rules stating that Bitcoin businesses may be considered money transmitters, which must abide by anti-money-laundering laws. The industry welcomed the move because it provided a road map for complying with regulations, and helped erode Bitcoin’s reputation as an enabler of illicit transactions.

That was the “starting-gun shot” of Bitcoin’s activities in Washington, said Marco Santori, chairman of the Seattle-based Bitcoin Foundation’s regulatory affairs committee, who said he met with Shasky Calvery.

After starting 2013 with no Washington presence, Bitcoin now has its own foundation and industry representatives as ambassadors to Capitol Hill. It’s being courted for business by professional lobbyists.

Bitcoin Buzz

Adrian Fenty, Washington’s former mayor now with the legal firm Perkins Coie, is helping develop a political strategy, at the same time fans of Ron Paul, a former libertarian-leaning Republican who ran for president in 2012, are turning up the buzz around Bitcoin.

The outreach is aimed at ensuring that wary lawmakers don’t kill the embryonic industry and regulators provide a clear set of rules to play by. A pair of mostly friendly Senate hearings in November showed Bitcoin’s early Washington moves -- though decentralized like the currency itself -- are working so far.

Even Senator Chuck Schumer, a New York Democrat who in June 2011 described Bitcoin as “an online form of money laundering,” sounded more upbeat about its prospects.

“As a rapidly growing hub for technology and venture capital, New York has every interest in building on the promise that technologies like Bitcoin have to revolutionize payment systems, or even form the building blocks for whole new technology platforms,” Schumer said during a Nov. 19 hearing.

The currency’s rapid rise in value, from about $13 per Bitcoin in January 2013 to about $840 yesterday, according to the CoinDesk Bitcoin Price Index, also is helping to push it onto Washington’s radar.

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