A BIT OF A PROBLEM: NATIONAL AND EXTRATERRITORIAL REGULATION OF VIRTUAL CURRENCY IN THE AGE OF FINANCIAL DISINTERMEDIATION

摘要

The recent development of virtual currencies, such as Bitcoin, as well as the computer networks that support them, have opened new avenues for the unbanked to reduce transaction costs and gain access to capital without reliance on existing remittance networks or traditional, often foreign, banking institutions that are the primary focus of Basel III. As this Paper will illustrate, however, the use of Bitcoin as a virtual currency is just the beginning of what can become a larger trend towards disintermediation of the delivery of financial services more generally. To realize the full potential of this revolutionary technology, however, it is essential that a coherent regulatory approach be developed that will address abuses of the technology, including fraud, money laundering, and tax evasion, such as what has recently been brought to light in the Silk Road case. In the absence of coordinated international action, a robust extraterritorial application of the U.S. Criminal Code appears to be the most viable option for the United States to shape the development of this technology as a legitimate complement to the international banking system. This Article begins with a discussion of what Bitcoin is, why it is important, and how it has been regulated to date in the United States and elsewhere. This is followed by a discussion, using the Silk Road case as a guide, of how the extraterritorial use of the U.S. Criminal Code provides a mechanism for regulating Bitcoin in the absence of a more coordinated international approach.