Regions

US financial leaders caution Bitcoin could be used to fund illegal activities

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January 24
7:04 AM 2014

In the World Economic Forum held in Davos thi week, top financial leaders in the US cautioned that Bitcoin could be used to finance illegal activities like terrorism and believe that regulation would be the end of the digital currency, Financial Times reported.

US Treasury Secretary Jack Lew told CNBC in a televised interview, "From the government's point of view, we have to make sure it does not become an avenue to funding illegal activities or to funding activities that have malign purposes like terrorist activities." He added that the transaction remained anonymous and that it provides hiding places for people.

For JPMorgan Chairman and Chief Executive Officer Jamie Dimon also told CNBC that the question is not the acceptance of the digital currency. He said, "The question is do we even participate with people who facilitate Bitcoin?" He also predicted that Bitcoin would be placed under the same set of regulations as other payment systems which could spell the end of the business, the report said.

The regulatory uncertainty governing the digital currency has dissuaded lenders from providing services to startups focused on the digital currency. However, Dimon's careful approach is different from that taken by its rival Wells Fargo. The latter recently formed a group to determine how the bank would be able to provide lending arrangements and services to Bitcoin entrepreneurs, the report said.

Dimon also cited the need for banks to know their clients and how it would be nearly impossible to do so with the digital currency. He said, "Governments put a huge amount of pressure on banks, and so, to know who your client is, anti-money laundering, did you do real reviews of that? Obviously it's almost impossible with something like that."

Lew apparently backed Dimon and said that they both have talked about the issue. He added that they "both share a certain incredulity" about the entire Bitcoin phenomenon.

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