California Comes Down Hard on Bitcoin

The State of California Department of Financial Institutions has published a letter, sent to the Bitcoin Foundation issuing a cease and desist warning. The decentralized currency, regulators say is, "engaged in the business of money transmission" and doing so without a license or authorization from California's Financial Code. There are pretty hefty fines in place for non compliance of between $1,000 and $2,500 per day, per transaction, that could lead to a rather substantial amount. There is one big issue however in that Bitcoin Foundation does not actually make any financial transactions at all.

Transactions are made via places such as the Mt.Gox exchange and other similar places, however, as was always going to be the case, these companies themselves are now coming under scrutiny as continuous problems mount up. Apart from the hacking scandals, the fact that there is a block on all USD withdrawals at present and that Mt.Gox is at present fighting a whopping $75 million law suit, Bitcoin Foundation is merely a guide on best practices and the likes. The US government is presently attempting to structure tougher rules regarding virtual currencies and argue that they simply must abide by the same rules as those that govern banks and other major financial institutions. Bitcoin Foundation charges companies to become members and invests that money in things such as security improvements and PR exercises, it does not make Bitcoin transactions and although the intention is there from the State of California they are a little off the target. Maybe this is just the beginning of a larger scale move against the currency in the state and no doubt both will be releasing further information soon, but one thing is most definitely clear, California is not happy with the way things are at the moment, and some things may have to change as when a letter of cease and desist is signed and sent by Mr P Crayton, and copied to the Deputy Commissioner of the DFI San Francisco actually quoting the US Code then you should probably take notice.