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45 Geo. J. Int'l L. 1169 (2013-2014)
A Bit of a Problem: National and Extraterritorial Regulation of Virtual Currency in the Age of Financial Disintermediation

handle is hein.journals/geojintl45 and id is 1207 raw text is: A BIT OF A PROBLEM: NATIONAL AND EXTRATERRITORIAL REGULATION OF VIRTUAL CURRENCY IN THE AGE OF FINANCIAL DISINTERMEDIATION ISAAC PFLAUM* AND EMMELINE HATELE4 ABSTRACT The recent development of virtual currencies, such as Bitcoin, as well as the com'puter networks that support them, have opened new avenues for the un- banked to reduce transaction costs and gain access to capital without reliance on existing remittance networks or traditional, often foreign, banking institutions that are the primary focus of Basel III. As this Paper will illustrate, however, the use of Bitcoin as a virtual currency is just the beginning of what can become a larger trend towards disintermediation of the delivery offinancial services more generally. To realize the full potential of this revolutionary technology, however, it is essential that a coherent regulatory approach be developed that will address abuses of the technology, including fraud, money laundering, and tax evasion, such as what has recently been brought to light in the Silk Road case. In the absence of coordinated international action, a robust extraterritorial appli- cation of the U.S. Criminal Code appears to be the most viable option for the United States to shape the development of this technology as a legitimate complement to the international banking system. This Article begins with a discussion of what Bitcoin is, why it is important, and how it has been regulated to date in the United States and elsewhere. This is followed by a discussion, using the Silk Road case as a guide, of how the extraterritorial use of the U.S. Criminal * Isaac Pflaum is a consultant at DisputeSoft, an expert witness firm specializing in liability issues arising in computer software cases. Mr. Pflaum is a licensed attorney and patent agent with extensive experience in IT and development of software for high-performance and parallel computing environments. Beforejoining DisputeSoft in 2013, he received an LL.M. andJ.D. from Georgetown University Law Center. During law school, he interned with the White House Office of Science and Technology Policy, the U.S. Department ofJustice, the U.S. International Trade Commission, the Court of Federal Claims and the U.S. Patent and Trademark Office. Prior to attending law school, Isaac received a master's degree in chemistry for developing massively parallel protein simulation software for the study of HIV and tuberculosis drug targets. Mr. Pflaum was also a guest researcher in the Computational Science Center at Brookhaven National Laboratory. t Emmeline Hateley is a J.D. candidate at Georgetown University Law Center (2015); she received her B.S. in Business Administration (International Business), cum laude, at the University of Southern California. @ 2014, Isaac Pflaum and Emmeline Hateley. 1169

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