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Digital currency popular in Miami draws congressional scrutiny

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@jamesmartinrose

WASHINGTON Lawmakers have formed a special group in a bid to stay on top of the exploding use of bitcoins and similar forms of digital currency in Florida and elsewhere in the country.

Miami has become a bitcoin hotbed, which some federal prosecutors say is tied to South Florida’s reputation as a money-laundering hub tied to drug-trafficking.

The new Congressional Blockchain Caucus is named after the online foundation of bitcoins: The blockchain is a digital ledger that records every bitcoin transaction with an encrypted 32-digit code.

“Blockchain technology has the potential to revolutionize the financial services industry, the U.S. economy and the delivery of government services,” Rep. Mick Mulvaney, a North Carolina Republican, said of the caucus he helped form.

Bitcoin proponents say it’s a revolutionary way to move value quickly and anonymously from one point to another, whether around the corner or across the globe, with no middlemen, no fees, no central banks, no collection of personal data and almost impenetrable computer security.

In the first money-laundering cases tied to bitcoins, a Miami-Dade judge last month dismissed charges against website designer Michelle Espinoza. He was charged with illegally transmitting $1,500 worth of bitcoins.

Polner ruled that the Bitcoin is not “tangible wealth,” is not backed by any government or bank, and “cannot be hidden under a mattress like cash and gold bars.”

Polner wrote: “Even to someone with limited knowledge in the area, the Bitcoin has a long way to go before it becomes the equivalent of money.”

The judge also said that Florida law’s description of money-laundering is too vague to apply to use of bitcoins.

Espinoza paid his lawyer in bitcoins, which fluctuate in value based on buying and selling demand through digital exchanges.

As of Monday afternoon, one bitcoin was selling for $608, more than double its worth of $298 in January 2015.

Andrew Hinkes, a Fort Lauderdale lawyer, said that Polner’s ruling could prompt Florida legislators to pass legislation more focused on bitcoins and other forms of digital currency.

“Hopefully, Florida’s Legislature will consider the impact of cryptocurrencies like bitcoin and craft legislation to balance their potential for abuse with their potential to foster innovation, create jobs and generate wealth,” Hinkes wrote on coindesk.com, which provides news about the controversial currencies.

Polner in her ruling also urged state legislators to update its money-laundering laws.

The IRS calls bitcoins “virtual currencies” and describes them as property, not money.

Bitcoin enthusiasts from across the country gathered in Miami in January for the 2016 Bitcoin Hackathon.

Held at LAB Miami in the trendy Wynwoood neighborhood, the conference encouraged developing Smartphone apps and other software to expedite the use of bitcoins.

Photo credit: Gary Reyes, San Jose Mercury News

 

 

 

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