Interest in cryptocurrencies is growing, even after Mt. Gox, formerly the largest international bitcoin exchange, filed for bankruptcy in Japan following $473 million in losses. Bitcoin’s resulting drop in value, from a $1,000 high to around $500, should be a reminder that cryptocurrencies are volatile payment systems under which the applicability of existing regulatory and commercial law is unclear.
Because bitcoin is not backed by any government or central bank, banking and financial industry regulations may not apply to bitcoin transactions. For this reason, Federal Reserve chairwoman Janet Yellen testified before Senate that the Federal Reserve lacks regulatory authority over bitcoin. Similarly, the Federal Deposit Insurance Corp. indicated in at least one context that a money transmitter like PayPal is not a bank for federal banking law purposes. Consequently, bitcoin users cannot expect deposit or investment protection from the FDIC or customer protection from the Securities Investor Protection Corp.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]