The US Federal Government recently published an investor alert titled: “Bitcoin: More than a bit risky” through FINRA, The Financial Industry Regulatory Authority. FINRA used, what most would consider to be, highly loaded, language to explain how: “This alert to caution investors that buying and using digital currency such as Bitcoin carry risks. Speculative trading in bitcoins carries significant risk. There is also the risk of fraud related to companies claiming to offer Bitcoin payment platforms and other Bitcoin-related products and services.”
FINRA, the US Government watchdog, stated that Bitcoin was not legal tender, and that means: “If no one accepts bitcoins, bitcoins will become worthless.” FINRA went on to remind citizens that
With FINRA batting for the fiat side, we are left under no illusion as to whether any part of the US Government prefers Bitcoin to fiat. The hardline federal attitude towards Bitcoin is even echoed in some states. Please remember the California’s Department of Financial Institutions did send a cease and desist letter to the Bitcoin Foundation, telling it to “cease and desist from the business of conducting money transmission in this state”. Though, more recently, California has passed legislation that explicitly classifies Bitcoin as legal money. Remember, as well, when New York’s Department of Financial Services, proposed comprehensive regulations for governing virtual currencies. Seen as legitimizing moves by some, the proposed BitLicense regulations are pro-bank and pro-Government.
With all the above, the US Government must figure Bitcoin is worthless, right? Well, no, not at all. Readers may remember an online marketplace called Silk Road that was seized by the US Marshals Service (USMS). Bitcoin was the coin of the Silk Road realm, and the US government recently auctioned roughly $20 million of the cyber-currency seized from the online marketplace. If we accept that the coins were indeed sold, and I’m not entirely convinced, the US Government still holds at least 110,000 bitcoins at a value of $500 each, giving a holding of $55M. Not a bad hoard for a currency that some in the US Government claim has no value! These hoarded bitcoins currently sit at this Bitcoin address: 1i7cZdoE9NcHSdAL5eGjmTJbBVqeQDwgw, which is #2 on the BitcoinRichList.
Note: Others, such as Satoshi Nakamoto, might technically hold more bitcoins (thus diluting Uncle Sam’s true rank) through the use of multiple addresses.
Your thoughts, please.
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Last modified (UTC): September 1, 2014 00:00