Virtual Currencies Seen as `Evolving Threat' by U.S. Treasury

(Bloomberg) -- The U.S. Treasury views virtual currencies such as Bitcoin as an “evolving threat” and is examining dealers to make sure they aren’t being used to finance illegal activities, the undersecretary for terrorism and financial intelligence said.

Treasury is working with the Internal Revenue Service examiners to review 100 registered digital currency providers as well as others that have not registered, Sigal Mandelker said in prepared testimony to the Senate Banking Committee on Wednesday. The department is also working with the Justice Department to pursue money laundering cases.

Bitcoin and other virtual currencies have tumbled from highs in mid-December amid a broader regulatory crackdown in countries including China and South Korea. According to Mandelker, the U.S., Japan and Australia are also among the few countries regulating virtual currency payments and exchange activities. Trading in U.S. dollars and Japanese yen now account for more than half of Bitcoin trading volume.

Bitcoin dropped below $10,000 in New York Wednesday, its lowest level since Dec. 1.

Mandelker said the U.S. will “aggressively pursue” digital currency dealers who don’t take compliance seriously.

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