What compliance expectations does the Department of Justice have for businesses entering the virtual currency space? How can a company meet those expectations to stay out of trouble with DOJ, or at least mitigate the effects of any criminal inquiry on it as well as its executives, employees, and investors? A recent speech by the Criminal Division head, Assistant Attorney General Leslie Caldwell, provides critical guidance on DOJ’s “approach to the emerging virtual currency landscape” and expands on its view that “compliance and cooperation from exchanges, companies and other market actors can ensure that emerging technologies are not misused to fund and facilitate illicit activities.”

DOJ’S VIEW OF HOW VIRTUAL CURRENCIES ARE USED -

DOJ is skeptical. While it knows virtual currency has “many legitimate actual and potential uses,” its enforcement stance is informed by the observation that “the inherent features of virtual currencies are exactly what make them attractive to criminals.”1F2 For instance, virtual currency systems “conduct transfers quickly, securely, and with a perceived level of anonymity,” have an “irreversibility of payments made in virtual currency and lack of oversight by a central financial authority” and the “ability to conduct international peer-to-peer transactions that lack immediately available personally identifiable information.