Some Bitcoin companies will be regulated as if they were traditional currency traders, the federal government said Monday.
The Financial Crimes Enforcement Network, or FinCEN, a division of the Treasury Department, issued two administrative rulings Monday that will clarify the rules surrounding businesses that exchange virtual currencies like Bitcoin for government-issued currencies. In both cases, FinCEN said the businesses should have the same status as currency dealers or check cashers and would have to register with the agency and comply with relevant regulations.
The rulings represent a small step toward greater federal oversight of virtual currencies and payments systems, a young but growing industry.
“These rulings aren’t meant to be any broad pronouncement,” said a spokesman for FinCEN, noting that they address specific facts relevant to two companies that had sought clarification of their status.
He added that “we encourage businesses that have questions about their status to make inquiries” to the agency.
One ruling concerns a company that sought to build a platform for customers to exchange virtual currencies for legal tender.
The other involved a business that wants to use Bitcoin to facilitate payments for hotels in Latin America where customers may have trouble exchanging money because of extreme exchange rates.
FinCEN ruled that both of the companies, neither of which was identified, are acting as money services businesses and would have to register with FinCEN as such and be subject to the relevant regulations. Both companies had sought guidance at the beginning of the year.
FinCEN’s main role is to combat money laundering and terrorist financing.
Bitcoin, which was introduced in 2009, has mostly avoided federal regulation, although members of regulatory bodies such as the Federal Reserve have taken note of its increasing popularity. Some members of Congress also have expressed interest in virtual currencies, in some cases advocating federal action against the legal use of Bitcoin.
But for the most part, the federal government’s interaction with Bitcoin has come through the Federal Bureau of Investigation or FinCEN in actions against financial crimes such as drug deals that involved Bitcoin transactions.
