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Treasury Department official says money laundering crackdown isn't part of an anti-Bitcoin campaign

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In March, US Treasury department FinCEN — which handles enforcement of financial crimes — turned its eye towards the world of virtual currency. The bureau published guidelines for how the federal Bank Secrecy Act applied to both centralized and decentralized virtual money, most prominently Bitcoin. FinCEN's guidance was cautiously welcomed by some and decried by others, who opposed rules asking Bitcoin miners or trading floors to register with FinCEN and submit tax information. Now, the issue of how to regulate virtual currency is more pressing than ever: the Justice Department has accused online banking service Liberty Reserve of laundering $6 billion with its anonymous trading system.

"Digital currencies are just a financial service and those who deal in them are a financial institution."

Since the Liberty Reserve indictment and the earlier seizure of funds from major Bitcoin exchange MtGox, some worry that this is the beginning of a crackdown on virtual currency. On the other side, people have long worried that Bitcoin could become an easy way to make illegal sales. But in an interview with American Banker, FinCEN director Jennifer Shasky Calvery insists that she's not trying to single them out. "Digital currencies are just a financial service and those who deal in them are a financial institution," she said. "Any financial institution and any financial service could potentially pose an AML [anti-money laundering] threat. It depends on whether folks have the controls in place to deal with those money laundering threats and that they are meeting their AML reporting obligations."

Shasky Calvery praised the "innovation" of new financial models, but she repeatedly emphasized their place in the current banking and financial world — a perspective that's likely anathema to those who see Bitcoin as a way to work outside a calcified monetary system. "It's a part of the financial framework as any other type of financial institution and it has the same obligations as those financial institutions, the same obligations as any money services business out there," she said. "For those that choose to act outside of those obligations and outside of the law, they are going to have to account for that."

She also denied that the guidelines were a new regulatory framework, instead referring to them as technical explanations of "something that already exists." Because of this, she said it wasn't necessary to ask for public comment. But the conversation over virtual currencies, she said, will be ongoing. For now, Shasky Calvery said that she wasn't worried about the Liberty Reserve case creating chilling effects on the larger market, and that it wouldn't set the tone for future action. "I would be hesitant ever to paint a broad brush because of one criminal action against an entire industry. I don't think that's fair to an industry in any situation, let alone this one."