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18 N.C. Banking Inst. 529 (2013-2014)
Banking on Bitcoin: Applying Anti-Money Laundering and Money Transmitter Laws

handle is hein.journals/ncbj18 and id is 565 raw text is: Banking on Bitcoin: Applying Anti-Money Laundering and Money Transmitter Laws I. INTRODUCTION As the first global, digital, and decentralized currency, bitcoin is the currency of the Internet.' Bitcoin relies heavily on peer-to-peer networking, eliminating the need for a central authority.2 Instead of allowing a government or bank to control the flow of bitcoins, the entire network of bitcoin users manages the transactions and issues bitcoins. Users do not have to interact with banks and financial companies to transact in bitcoins; users need only interact with the person to whom they want to send bitcoins.4 Bitcoin appeals to individuals who would like to remain anonymous, as payments can be made without any personal information being exchanged.5 The government must adapt existing anti-money laundering and money transmitter laws to cover this new virtual currency and stop illegal activities. The government began the process with the U.S. Treasury Department's Financial Crime Enforcement Network's (FinCEN) guidance on which regulations apply to individuals or entities using virtual currencies.6 While this answered some questions, it only scratched the surface of the complexities of the initial regulation of bitcoin.7 The question remains as to which laws should apply to bitcoin and how. More specifically, money transmitter and anti-money 1. See Reuben Grinberg, Bitcoin: An Innovative Alternative Digital Currency, 4 HASTINGS Sc. & TECH. L.J. 159, 160 (2012). 2. See id.; see also Jeffrey A. Tucker, Bitcoin for Beginners, THE FREEMAN, May 2013, at 19. 3. See EuR. CENT. BANK, VIRTUAL CURRENCY SCHEMES 21 (Oct. 2012), available at http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes20121 Oen.pdf. 4. Id. 5. See Jose Pagliery, Ron Paul: Bitcoin Could 'Destroy the Dollar', CNN MONEY (Dec. 4, 2013, 12:01 PM), http://money.cnn.com/2013/12/04/technology/bitcoin-libertarian/. 6. FIN. CRIMES ENFORCEMENT NETWORK, DEP'T OF THE TREAS. (March 18, 2013), available at http://fincen.gov/statutes-regs/guidance/htm/FIN-2013 -GOO 1.html. 7. See generally id.