Bitcoin, other virtual currencies to face international scrutiny
TOKYO -- Financial authorities in some of the world's biggest economies, including the U.S., China and Japan, will seek common rules on virtual currencies like bitcoin to stop them from serving as a medium for terrorist financing, money laundering and other illicit activities.
The 36 members of the Financial Action Task Force, an intergovernmental body, are expected to compile guidelines for regulating virtual-currency exchanges, in effect creating an international framework for regulation. The FATF will also urge nonmembers to adopt the guidelines.
Bitcoin suffered a major blow in Japan last year when one such exchange, MtGox, went bust. But bitcoin users are growing once again, particularly in the U.S. Other cryptocurrencies are gaining popularity.
The FATF is looking to increase scrutiny of the exchanges that let users swap virtual currencies for real money. Its guidelines will call on members to establish rules for reporting transactions that smack of terrorist involvement, such as money transfers to territory under the black flag of Islamic State militants, and require exchanges to perform identity checks for new account openings.
In Japan, officials have proposed bringing virtual-currency exchanges under the scope of a law meant to stop transfers of criminal proceeds, which requires businesses in certain industries to perform identity checks on users.