CFPB to Assume a Larger Role in Virtual Currency Initiatives

On June 26, 2014, the U.S. Government Accountability Office (“GAO”) released a report, entitled “Virtual Currencies: Emerging Regulatory, Law Enforcement, and Consumer Protection Challenges.” The report, delivered earlier to the U.S. Senate Committee on Homeland Security and Government Affairs, is the GAO’s second report on virtual currencies. In 2013, the GAO released a report on the tax implications of virtual currencies, which led to guidance from the Internal Revenue Service (“IRS”) concluding that virtual currencies should be treated by the IRS as property for tax purposes.

The GAO’s second report examines the roles, responsibilities and challenges federal agencies face in connection with the regulation of virtual currencies. The report names the Financial Crimes Enforcement Network, the prudential banking regulators, the Securities and Exchange Commission, the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice and the Department of Homeland Security as the federal agencies responsible for overseeing both the legitimate and illegitimate uses of virtual currencies. According to the GAO report, these agencies are responsible for addressing the regulatory, law enforcement, and consumer protection challenges presented by virtual currencies.

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