Inside the Bitcoin advocates’ closed-door meeting with federal regulators

The US government took the latest step toward regulating virtual currencies as representatives from the Bitcoin Foundation met behind closed doors with federal officials in Washington.

Attendees say the meeting was cordial, with regulators listening carefully as Bitcoin advocates warned that excessive regulation could drive innovation in virtual currencies overseas. Nearly a dozen high-level agencies were in attendance, including the Justice Department, the Federal Bureau of Investigation, the Department of Homeland Security, the Internal Revenue Service, the Secret Service and the Financial Crimes and Enforcement Division (FinCEN) of the Treasury Department, which convened the discussion. The meeting was the first opportunity for advocates of Bitcoin — the online currency that can be used to buy real-world goods and services — to explain the system to a wide array of federal officials. Assuaging doubts concerning payment methods and vulnerability to financial crimes, Jim Harper, a member of the panel and the director of information policy studies at the Cato Institute, feels that allowing Bitcoin to operate freely might result in a more competitive payments sector. He said, “Right now, it’s $3 to get money out of an ATM,” Harper said. “Technology like Bitcoin could change that equilibrium . . . doing it in a market-based way rather than a regulatory way.”