Calvery made a distinction between centralized virtual currencies that have a centralized repository and a single administrator, and decentralized currencies like Bitcoin which transmit value electronically between parties without an intermediary.
"We have seen both centralized and decentralized virtual currencies exploited by illicit actors," Calvery said, but added that any financial institution, payment system or medium of exchange could also be exploited for money laundering purposes or terrorist-financing. FinCEN has increased its oversight of virtual currency operators by guiding administrators or exchangers of virtual currencies that they must register with FinCEN, and institute certain recordkeeping, reporting and AML (anti-money laundering) program control measures.
Virtual currency is not necessarily synonymous with anonymity, and a convertible virtual currency with appropriate anti-money laundering and know-your-customer controls under U.S. law, can be as safe from exploitation by criminals and terrorists as any other money services business could, Raman said.
Carper has previously said that the government should evolve thoughtful policies rather than play 'whack-a-mole' with the latest website, currency, or other method criminals are using This approach translates into challenges for law enforcement as well. Hiring, developing, and retaining skilled criminal investigators that are required to investigate crimes involving digital currencies and transnational organized criminal groups is a high priority for the Secret Service, but is challenging in the present fiscal environment, said Edward Lowery III, special agent in the Secret Service.
Some agencies have already taken measures to accept virtual currencies in some way. The U.S. Federal Election Commission, for example, recommended in an advisory this month that bitcoins can be accepted as in-kind campaign contributions, though disallowing disbursements through bitcoins from a bitcoin wallet.