Federal Regulation of Virtual Currencies

Abstract

We examine how the U.S. federal government, which initially was slow in examining and prosecuting violations of law brought about by the misuse of virtual currencies, has now taken aggressive action against parties who either deliberately or carelessly act in violation of the rights of users and customers. We examine the role of the U.S. Securities and Exchange Commission (SEC) and its initial prosecutions; the Commodity Futures Trading Commission, which together with the SEC, are the leading prosecutorial agencies with respect to the new currencies; the Financial Crimes Enforcement Network and its guidance to the financial industry; and additional agencies and their attempts to protect investors and consumers.