VIRTUAL CURRENCY: RISKS AND REGULATION

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As the use of virtual currencies for payment transactions and speculative investments in virtual currencies rapidly expand, regulators in the United States and abroad are grappling with how best to regulate such currencies to protect consumers and investors, maintain the stability of the financial system, and deter use of virtual currency systems in money laundering and terrorist financing. This white paper addresses the potential application of existing payments, securities, and commodities regulations to protect consumers, investors, and the financial system. Part I of this white paper summarizes current regulatory approaches to virtual currencies in the United States and abroad. Part II describes the virtual currency system (using Bitcoin as an example) and a typical virtual currency transaction.

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Spotlight

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