US agencies meet amid security concerns over digital currency

A Bitcoin trade group will meet today with the US Treasury Department’s Financial Crimes Enforcement Network and an array of law-enforcement officials and regulators to discuss oversight of the digital currency.

Members of the Bitcoin Foundation will brief representatives of federal agencies including the FBI, IRS, Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp and Secret Service on the nature of the virtual currency, created four years ago.

“It’s a kickoff of engagement,” said Peter Vessenes, chairman of the foundation’s board, who said that the meeting will be “standing-room only,” because of the high interest among government officials. “Right now, law enforcement would read a salacious story, and not know what’s going on. We can help them understand what’s going on.”

It will be a “routine” meeting, said Stephen Hudak, a spokesman for FinCEN, which released guidance in March saying digital currency administrators and exchangers are considered money-services business subject to regulations and anti money-laundering controls.

Bitcoin Foundation, a Seattle-based group that promotes the currency, seeks to improve standardisation and security for the “non-political online money,” according to its website. Vessenes described today’s meeting as an “educational meet-and-greet.”

The OCC will send three staff members to the “informational presentation,” said Bryan Hubbard, a spokesman for the agency, which regulates national banks.

New York’s top banking regulator, Benjamin Lawsky, sent subpoenas to 22 digital currency companies, including BitInstant LLC and Dwolla Corp, to determine whether new regulations should be adopted to govern the emerging industry. The Senate’s Homeland Security Committee is also examining possible risks of the virtual currency.

Cameron and Tyler Winklevoss, who gained fame after the brothers’ legal clash with Facebook co-founder and chief executive Mark Zuckerberg over the origin of the social network, filed last month with the Securities and Exchange Commission to create the Winkelvoss Bitcoin Trust — a variation of an exchange-traded fund that would hold Bitcoins.

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