Bitcoin’s wild volatility, and its ability to facilitate crimes such as money laundering, make it dangerous to Americans and it must be banned, U.S. Senator Joe Manchin said Wednesday.
Manchin’s call to action came in a letter sent Wednesday to a group of federal regulators including U.S. Secretary of the Treasury Jack Lew, Federal Reserve chairwoman Janet Yellen and Federal Deposit Insurance Corporation chairman Martin Gruenberg.
The letter argues that some of the basic features in how Bitcoin is purported to work make it attractive to criminals seeking to hide their actions from law enforcement.
The anonymity offered by Bitcoin makes the currency susceptible to hackers and theft, as well as a haven for black market items, Manchin wrote. Also, Bitcoin’s ability to finalize transactions quickly makes it difficult, if not impossible, to reverse fraudulent transactions, he said.
The roller-coaster fluctuations in the value of Bitcoin also mean average American consumers have a lot to lose by transacting in Bitcoin, Manchin said. “The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary [sic] of its use,” he said.
In 2011, Manchin, a Democrat from West Virginia, co-authored a letter with U.S. Senator Charles Schumer taking aim at Silk Road, an online marketplace for illegal drugs.
Since then, some experts have questioned the extent to which payments made through Bitcoin are actually anonymous, and the speed at which they can be verified.
That hasn’t stopped governments in some other countries, such as Thailand, China and Russia, from either banning Bitcoin outright or issuing stern warnings against it.
“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,” Manchin said.
“It is high time that the United States heed our allies’ warnings,” he said. As Bitcoin is banned in other countries, Americans will be left with a valueless currency, he said.
Manchin’s call comes as Mt. Gox, one of the most prominent exchanges for buying and selling bitcoins, faces an uncertain future. Mt. Gox recently stopped allowing withdrawals, and on Monday its site was replaced by a statement saying all transactions were closed. In a new statement added to the site on Wednesday, Mt. Gox CEO Mark Karpeles said he was still in Japan and “working very hard with the support of different parties to find a solution to our recent issues.”
To ban Bitcoin, Congress probably would need to draft new legislation. But the government might regulate Bitcoin in other ways that could hamper use of the currency.
The Bitcoin Foundation, a trade group that advocates for the use of Bitcoin, did not immediately respond to comment on Manchin’s letter.