Governments Continue to Tighten Fence Around Bitcoin Transfers

by Mercator Advisory Group 0

The U.S. Department of Homeland Security issued a court order to Dwolla to cease wire transfers between it accounts and Mt. Gox, a Japanese Bitcoin exchange. This action keeps the downward pressure on Bitcoin exchanges and echo’s similar recent actions in the United Kingdom and Canada.

From PC World:

One of the primary concerns around bitcoin is its use in money laundering. Mt. Gox has said it verifies the identity of its trading platform users in order to comply with international anti-money laundering standards.

Although the transfer of bitcoins lies outside traditional banking systems, buying the currency often requires bank transfers. Mt. Gox has encountered banking problems. In September 2012, Mt. Gox wrote on Facebook that U.K. bank Barclays had suspended British pound deposits into its account.

This latest edict continues to highlight the problematic nature of digital currencies, which try to operate in open, unregulated manners intended to replicate the cash payment experience. They do so, however, in an environment where money launderers need new channels to move funds cross-country as banks have become increasingly watchful.

Legitimate users may begin to shy away from payment schemes such as bitcoin if accounts can be frozen or blocked without notice and more stable alternatives are available. Mt. Gox isn’t commenting and we would expect that as more exchanges close, those left behind will have to learn how to co-exist with regulators or end-up in the bin that contains good examples of bad ideas.

Click here to read more from PC World.