Below is a summary of some of the significant legal and regulatory actions that occurred over the past week. This alert is not intended to be a comprehensive list of all such developments, but rather a selection of publicly-reported news that may be of particular interest.
U.S. Developments
Man Pleads Guilty to Operating Unlicensed Bitcoin Exchange – Louisiana
A former chiropractor and his son pleaded guilty to operating an illegal bitcoin exchange business. They were accepting currency, money orders, and money paks, and exchanging those funds for bitcoin. However, they were not registered with FinCEN, nor licensed to operate as a MSB in Louisiana. They face a potential five year prison sentence, and a $250,000 fine. https://www.justice.gov/usao-wdla/pr/former-shreveport-chiropractor-son-plead-guilty-operating-illegal-bitcoin-exchange
Georgia House Bill – Adds definition of Virtual Currency to the Sale of Payment Instruments
Among other legislation, Georgia House Bill No. 811 amends Code Section 7-1-680 by adding a new paragraph defining “Virtual Currency”. It also revised Code Section 7-1-690, authorizing the Department of Banking and Finance “to enact rules and regulations that apply to persons engaged in money transmission or the sale of payment instruments involving virtual currency.”
International Developments
UK Treasury – Not Imposing AML Requirements on Bitcoin Wallet Operators
The UK Treasury published a report last week describing the government’s plans to stop money laundering and terrorist financing risks. As part of the plans, the government will implement AML regulation. However, it will not seek to impose these AML regulations on virtual currency wallet providers. http://www.coindesk.com/uk-treasury-we-wont-regulate-bitcoin-wallet-providers/
Russia – Proposed Legislation would Punish Digital Currency Use
The Finance Ministry in Moscow is planning to submit legislation next month which would punish those using digital currencies. The proposed legislation would prohibit the issuance of digital currencies, as well as their use in exchange for goods and services in Russia. The range of penalties is commensurate with the level of usage. Penalties would start at four years in prison and a fine of 500,000 rubles for individuals, and the most severe penalties for those managing financial firms (as high as 2.5 million rubles ($38,000) and jail sentences up to seven years). Russia joins Bolivia, Iceland, and Vietnam in taking steps to criminalize digital currency use. http://www.bloomberg.com/news/articles/2016-04-28/russian-law-would-send-bitcoin-users-to-jail-as-cybercriminals