Feb 24 2014

How Should the Government Spend All Those Bitcoins?

Cryptocurrency is unknown territory for the government, but with $3.3 million in its pocket, it’s time to address the issue.

Bitcoin raises a number of questions for the federal government; the currency is not backed or produced by the government, which means it has little to no control over how the currency is used. Because Bitcoin is anonymous — it’s a cryptocurrency — it’s an ideal way for drug traffickers, hackers and other criminals to move large amounts of money. And since Bitcoin is relatively new, there are no written rules for how the government should handle the currency when it’s seized during a raid — like in the recent Silk Road bust — leaving the FBI in an odd position. Robert McMillan and Cade Metz explain on Wired’s Enterprise blog:

When the FBI seizes millions of dollars in cash from some warehouse at the heart of an urban drug cartel, the money winds up in a government building somewhere and eventually finds its way into a government bank account, where it helps finance all sorts of government stuff, like the next FBI drug bust.

But what happens when the feds bust an online drug marketplace and confiscate millions of dollars in bitcoins, the wildly popular digital currency that doesn’t exactly align with the government’s way of doing things — and so often serves as a convenient means of money laundering? What will become of the $3.3 million in bitcoins the FBI seized after shutting down the Silk Road early last week — not to mention the $80 million or so in bitcoins they’ve yet to seize from the personal account of the man who allegedly ran the online drug bazaar?

Let’s assume the government could legally spend the $3.3 million it already has in its possession. What should they spend it on? Let us know below, or tweet us using the hashtag #FedTechAsks.


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