Countering Money Laundering and Terrorist Financing: A Case for Bitcoin Regulation
Fletcher, Emily Grace
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Bitcoin was created in 2008 to serve as an alternative payment mechanism for the underbanked and unbanked, or those in regions where the formal financial system suffers from rampant corruption or ceases to exist altogether. However, criminals and terrorists quickly exploited Bitcoin’s unique properties, namely its peer-to-peer nature and pseudo anonymity, to facilitate extensive terrorist financing and money laundering schemes. Government reactions to safeguard national security interests have been extremely varied, ranging from outright bans to passive tolerance. This inconsistency stems from how to effectively classify Bitcoin. On one side are those who argue Bitcoin is a currency, and on the other are those who claim it is a type of asset. In the United States alone, these discrepancies have led to a bureaucratic turf war between different regulatory bodies, namely the Financial Crimes Enforcement Network, the Commodity Futures Trading Association, the Securities and Exchange Commission, and the Internal Revenue Service. This study seeks to move beyond the existing legal frameworks, arguing that Bitcoin should be classified as a technology and regulation should rest with private sector technology companies.