Further to our recent blog (see Bitcoin – legal tender of the future or fad?), Forbes reported yesterday via contributor Jon Matonis, who sits on the Board of Directors of the Bitcoin Foundation in California, that California’s Department of Financial Institutions (DFI) issued a cease and desist letter to the Bitcoin Foundation. The Foundation is accused of engaging in money transmission without obtaining a licence or proper authorisation to do so under the California Financial Code and is warned to desist in doing so. Violating the California Financial Code can lead to criminal prosecution resulting in a fine and/or imprisonment as well as civil fines.
The DFI is California’s equivalent of the Financial Conduct Authority (FCA) and regulates the operations of state-licensed financial institutions, including banks, credit unions, savings associations, business and industrial development corporations, money transmitters, etc. It is important to note that the Foundation, through Jon Matonis, denies the ‘charge’.
It is possible that other cease and desist letters to Bitcoin related entities in California will follow.
We have already highlighted some of the major legal issues relating to Bitcoin in our previous blog however it would be unfortunate if these were effectively to spell the end of a disruptive, radical and very exciting digital alternative to traditional means of payment. This is especially so when, according to the Guardian, Britain has just got its first Bitcoin accepting pub in East London!