GAO Wants CFPB to Focus on Virtual Currencies

GAO issued a report discussing virtual currencies. One example of these is bitcoin, which was developed in 2009. Bitcoin and similar virtual currency systems operate over the Internet and use computer protocols and encryption to conduct and verify transactions. According to GAO, while these virtual currency systems offer some benefits, they also pose risks. For example, GAO notes they have been associated with illicit activity and security breaches, raising possible regulatory, law enforcement, and consumer protection issues.

Federal agencies also have begun to collaborate on virtual currency issues through informal discussions and interagency working groups primarily concerned with money laundering and other law enforcement matters. However, according to GAO, these working groups have not focused on emerging consumer protection issues, and the CFPB—whose responsibilities include providing consumers with information to make responsible decisions about financial transactions—has generally not participated in these groups.  GAO stated  interagency efforts related to virtual currencies may not be consistent  with key practices that can benefit interagency collaboration, such as including all relevant participants to ensure they contribute to the outcomes of the effort.  GAO concludes, as a result, future interagency efforts may not be in a position to address consumer risks associated with virtual currencies in the most timely and effective manner.

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