Want more government in your pocket?Wednesday, the US federal government froze the largest Bitcoin exchange.The Department of Homeland Security seized an intermediary account which tied Dwolla to Mt.Gox, which hosts 80% of all Bitcoin trades.Gox was an “unlicensed money service.” The exchange was based in Japan.Why did this happen?According to Gawker, Mt.Gox’s chief executive, Mark Karpeles, “failed to declare he was operating a money transmitting business when he opened an account with WellsFargo in May 2011, according to a warrant made public on Wednesday.” The US Treasury Department ruled in March that any entity exchanging online currency, such as Bitcoin (which is not backed by a centralized bank), would be suspect for money-laundering.This lead to the Treasury requiring reports of any transaction worth more than 10,000 US Dollars.According to the Wall Street Journal, “The Commodity Futures Trading Commission also is considering whether to regulate so-called virtual currencies.” Because of this, the US authorities charged Mt.

Gox with failing to register their business with the Treasury’s Financial Crimes Enforcement Network.This entirely undoes why people love Bitcoin; the Internet-based currency has no central governmental planner.The government argues that registration aids in combating terrorism and helps the War on Drugs.A Bitcoin exchange could likely never reach the requirements needed to be a “legitimate” currency exchange.bitcoin regulation philippinesMost notably, licensed Internet exchanges require their users to be able to identify all parties involved in the transaction.sell bitcoin in ghanaBitcoin, however, is specifically designed to be anonymous.bitcoin al qaedaThe transaction may never be able to be traced.ethereum phone wallpaper

Thus, “it’s not all that easy to see how a Bitcoin exchange can ever become so licensed.” In other words, the current system would not allow Bitcoin to operate successfully unless it radically changed its design.Seems to me like the US government is having a power trip on this one; after all, Bitcoin is a great way to illegally evade taxes and deal drugs.Jerry Brito from the Mercatus Center notes why the government thankfully won’t win this one.etherium blackHe says, “Bitcoin has the potential to be a boon to the economy and a boon to merchants… You can’t put the genie back into the bottle… I hate to say it, but the Bitcoin community needs to start lobbying.bitcoin miner usb macIt needs to start educating policymakers, lobbyists and influencers about the pros of Bitcoin and the impossibility or the difficulty in getting rid of all the bad uses.” Looks like the Bitcoin war has finally begun.cara join bitcoin

Let the Internet militias assemble.Regulation and security is a major issue that enterprising people in the Bitcoin economy have to deal with on a day-to-day basis.Localbitcoins, is a Finland-based marketplace for connecting people to buy and sell the currency.Recently, the site experienced an event that is an example where banking authorities have shown their authority with concern to Bitcoins.In a blog post, Localbitcoin’s Andrei Zillo relayed the story of his company’s Swiss bank account being frozen by authorities there because of a large Bitcoin transaction.bourse bitcoin franceA customer that Localbitcoins had done business with in the past requested a large amount of Bitcoins for Euros.bill gates bitcoin quoteThe money was sent to Localbitcoins using a Single Euro Payments Area (SEPA) transfer.Localbitcoins carried out the transaction, only to later receive a request to return the funds by the bank that sent to transfer.

The problem is, Localbitcoins had already transferred BTC to the customer’s Bitcoin address.Because of this, they declined the request to return the funds to the originating bank.This resulted in the Localbitcoins Swiss account being frozen until the situation was resolved.The predicament took three days to untangle while the bank had Localbitcoins's account frozen.While dealing with the complications arising from a transaction supposedly gone wrong, the company was able to continue operating.“We keep minimum balances on all of our accounts to minimize the impact of asset freezes due to political and criminal risks in the virtual currency industry”, Zillo explained.Interestingly enough, the customer requesting the Bitcoins had deleted their Localbitcoins account shortly after the transaction was completed.This could be construed as suspicious activity, especially for a customer who had been regularly doing business with Localbitcoins.“By the laws of Finland, the originating bank of a wire transfer (the Swiss bank in our case) is responsible for clearing the money and making sure the transfer is legit”, wrote Zillo.

Because of this, and by providing a receipt of the transaction, including the Bitcoin addresses involved, the account was unfrozen.Stories like this are likely to crop up from time to time as the banking industry grapples with how to handle digital currency transactions.Unlike credit cards, once Bitcoins are sent from one address to another, the transaction cannot be reversed.Many Bitcoin businesses could be confronted with problems because of this as the currency tries to gain adoption and respectability.In the end, companies that are doing business exchanging Bitcoin for fiat currency face challenges because they inevitably have to work with the banking industry.When dealing with the exchange and transmission of currencies, it’s important to know the laws.Understanding how SEPA works, as well as regulations in other localities where Bitcoin enterprises do business is going to be important going forward.Have breaking news or a story tip to send to our journalists?Charles Bartlett, a 17-year-old student and aspiring entrepreneur, is still waiting for an explanation after being “sacked” by his bank earlier this year.

Unfortunately, his is not an isolated case.A small number of people, estimated to be in the low thousands each year, are told that their bank has made a “commercial decision” to close their account.Banks tend to offer no explanation and customers who ask for one are brushed off and told to take their grievance to the Financial Ombudsman Service (FOS).Even then, banks do not always justify their actions and Mr Bartlett is unlikely ever to find out why he became one of the youngest people in Britain to be told by his bank, Barclays, to take his business elsewhere.However, he suspects that his buying and selling of “Bitcoin”, the controversial digital currency, is behind the bank’s decision.On February 19 Mr Bartlett had his account frozen and a week later, in a letter dated February 26, Barclays told him that “we are unable to continue acting as your bankers”.The letter said he could withdraw his funds, around £400, but when he visited a branch was told the money was still frozen.

He appealed against the decision and was eventually told that a £50 “fraudulent payment” to his account on February 19 was behind its freezing.The bank told him: “The activity on the account promoted a routine review of the account and a commercial decision to close your account was made.” The decision was upheld by an internal investigation.Barclays did apologise for saying Mr Bartlett could access his funds while the investigation was taking place.It blamed a “staff error” and paid £50 for “distress” and “inconvenience”.Mr Bartlett has now withdrawn his money and set up a current account with Lloyds.The fraud traps set by your bank He started buying and selling Bitcoin through online exchanges on February 14.Mr Bartlett, who hopes to study computer science when he goes to university in September, had swotted up on the currency and wanted to see whether he could make some money by trading in it.Five days later Barclays pulled the plug on his account.“The only change in how I was using my current account was when I was buying and selling Bitcoin online to try and make some money,” Mr Bartlett said.

“I was doing quite well – I made a small profit of 10pc, or £40 – but then was unable to access my account online.“I know a bit about this area as I hope one day to become an entrepreneur.I didn’t think I was doing anything wrong and, if anything, I was being entrepreneurial and taking the initiative as a student.“To sum this whole situation up, someone made a fraudulent payment into my account and from there they ‘reviewed’ my account and made ‘a commercial decision’ to close it.But what I am still not happy about is that they still haven’t given me an actual reason as to why they closed the account, and I have a feeling they never will.” He accepted that the fraudulent payment was made into his account from an online Bitcoin exchange that he was using.'I lost £650 because Tesco Bank thinks I wrote down my Pin' But when Telegraph Money asked Barclays whether its decision to close the account was because of the Bitcoin transactions, a spokesman refused to provide an answer.

Instead he said: “We cannot provide any further information on this occasion regarding the reasons for closure.The decision to close an account is never taken lightly.This decision was carefully considered and subject to our strict internal review process.” The Financial Services Consumer Panel has campaigned against the practice of banks closing customer accounts without explanation.Sue Lewis, who chairs the panel, said: “It is unacceptable that consumers who have not acted fraudulently and have not been found guilty of a crime find themselves in limbo, unable to even know the reason for the bank’s action.” According to the British Bankers’ Association, where crime is suspected banks can give only limited explanations to customers because they have an obligation not to “tip off” suspected criminals.The FOS is powerless in these cases.A spokesman said: “There are occasions where banks will close an account without any explanation, such as when it has been linked to fraudulent or criminal activity.” - kyle.caldwell@telegraph.co.uk