ABSTRACT

Bitcoin: Questions, Answers, and Analysis of Legal Issues [December 20, 2013]   [open pdf - 304KB]

"The Bitcoin system is private, but with no traditional financial institutions involved in transactions. Unlike earlier digital currencies that had some central controlling person or entity, the Bitcoin network is 'completely decentralized', with all parts of transactions performed by the users of the system. With a Bitcoin transaction there is no third party intermediary. The buyer and seller interact directly (peer to peer) but their identities are encrypted and no personal information is transferred from one to the other. However, unlike a fully anonymous transaction, there is a transaction record. A full transaction record of every Bitcoin and every Bitcoin user's encrypted identity is maintained on the public ledger. For this reason Bitcoin transactions are thought to be pseudonymous, not anonymous. Although the scale of Bitcoin use has increased substantially, it still remains small in comparison to traditional electronic payments systems such as credit cards and the use of dollars as a circulating currency. Congress is interested in Bitcoin because of concerns about its use in illegal money transfers, concerns about its effect on the ability of the Federal Reserve to meet its objectives (of stable prices, maximum employment, and financial stability), and concerns about the protection of consumers and investors who might use it. […] Bitcoin also raises a number of legal and regulatory concerns including its potential for facilitating money laundering, its treatment under federal securities law, and its status in the regulation of foreign exchange trading."

Report Number:
CRS Report for Congress, R43339
Author:
Publisher:
Date:
2013-12-20
Copyright:
Public Domain
Retrieved From:
Via E-mail
Format:
pdf
Media Type:
application/pdf
URL:
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