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St. Thomas Law Review

Mitchell Hyman

First Page

296

Document Type

Comment

Abstract

This comment discusses how solely applying current Bank Secrecy Act ("BSA") and Department of Treasury Financial Crime Enforcement Network" ("FinCEN") regulations to virtual currency-specifically Bitcoin ATMs-will put a strain on Bitcoin ATM owners and the industry, but will not reduce the risk of money laundering. Part II of this comment discusses the characteristics of Bitcoin, explains the environment in which it exists, and how individuals use Bitcoin. In Part III, this comment discusses how BSA regulations apply to virtual currency. Additionally, Part III analyzes how Bitcoin ATM owners and operators would be classified under FinCEN's 2013 guidance. Part IV shifts focus to the potential BSA requirements for Bitcoin ATM owners and operators, and discusses the potential for criminal and civil sanctions for disregarding BSA regulations. Lastly, Part V discusses how the current identification requirements under the BSA are not conducive for Bitcoin ATMs to properly identify their customers. Part V additionally suggests FinCEN implement regulations that will create a balance between the need to identify customers and Bitcoin's focus of anonymity. The focus of the suggested regulation is to equip Bitcoin ATMs with (1) a passport or government issued identification ("ID") scanner; (2) software that matches the information gathered from the ID with state and national databases; (3) a camera that takes a picture of the Bitcoin ATM user in real-time; and (4) facial recognition software that matches the scanned ID with the picture taken in real-time and with the picture on file with the issuing authority. This proposed regulation would make it easier to fight money laundering at Bitcoin ATMs while balancing the privacy concerns held by Bitcoin users.

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