Gov’t Could Crack Down on Virtual Currencies

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The federal government could step up efforts to crack down on virtual currencies such as Bitcoin, which some medical marijuana businesses use to handle transactions with customers.

The head of the Justice Department’s Criminal Division told Congress on Monday that virtual currencies  give criminals the freedom to pay for illegal drugs, child pornography and other nefarious goods and services. The currencies provide criminals with anonymity and the ability to process irreversible transactions that are difficult to trace, Mythili Raman told the Senate Homeland Security Committee.

A handful of medical marijuana businesses – including dispensaries – are dabbling with virtual currencies as they seek new methods for taking payments from customers. Most banks and all the major credit card companies have shut out the industry, forcing cannabis businesses into an all-cash model.

The congressional meeting came a month after the federal government shut down online marketplace Silk Road, which was a popular site for purchasing marijuana and other drugs. According to CNN, marijuana in the U.S. sold for approximately $15 a gram on Silk Road before the site was shut down.

It was the first congressional hearing on virtual currencies, and it could lead to a more serious discussion – and additional enforcement – against them.