First it was powerful New York Senator Chuck Schumer calling for Silk Road to be shut down, citing Bitcoin’s use for anonymous black market transactions. Now it is Senator Joe Manchin (D-WV) calling on financial regulators to issue an outright ban on Bitcoin.
“This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy,” Manchin wrote in a letter to regulators including Federal Reserve Chairwoman Janet Yellen, Treasury Secretary Jack Lew, SEC Chairwoman Mary Jo White and CFTC acting Chairman Mark Wetjen.
Black market usage key point
Like Schumer, Machin noted Bitcoin’s use by Silk Road and other black markets for anonymous transactions. “The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary of its use.”
Machin’s understanding of why Bitcoin has gained popularity might not square with supporters of the crypto currency, as he says “Bitcoin is a crypto-currency that has gained notoriety in recent months due to its rising exchange value and relation to illegal transactions.” Bitcoin supporters don’t necessarily believe its rise in mainstream popularity is due to illegal transactions, but Machin continues. “Bitcoin has also become a haven for individuals to buy black market items. Individuals are able to anonymously purchase items such as drugs and weapons illegally.”
Volatility a concern as other nations ban Bitcoin
Noting what he sees as growing international demand to end Bitcoin, Manchin writes, “Indeed, it has been banned in two different countries—Thailand and China—and South Korea stated that it will not recognize Bitcoin as a legitimate currency.
Several other countries, including the European Union, have issued warnings to Bitcoin users as their respective governments consider options for regulating or banning its use entirely. Our foreign counterparts have already understood the wide range of problems even with Bitcoin’s legitimate uses – from its significant price fluctuations to its deflationary nature,” noting the highly volatile nature of the exchange structure.
Machin noted the Senate Homeland Security and Governmental Affairs Committee issued a report just this month stating, “There is widespread concern about the Bitcoin system’s possible impact on national currencies, its potential for criminal misuse, and the implications of its use for taxation.”
“Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans,” Machin wrote.
A press statement later clarified Manchin’s statement to include only Bitcoin and did not extend to other cryptocurrencies.