89 Ind. L.J. 441 (2014)
Bitcoin and Money Laundering: Mining for an Effective Solution

handle is hein.journals/indana89 and id is 453 raw text is: Bitcoin and Money Laundering:
Mining for an Effective Solution
Technology forges ahead at a rapid pace, whether we like it or not. Criminals
recognize this inevitability and use technological improvements to advance their
craft,' committing crimes from half a world away in real time. Meticulous criminals
also use technological advancements to distance themselves from their illegal
activities and profits through use of virtual banking and electronic money transfer
systems, which allow criminals to buy, sell, and exchange goods without any
physical interaction. Though such services use digital logs that serve to identify a
sender and a receiver's digital identities, criminals possess the means to obfuscate
their digital identity by simply spoofing their Internet Protocol address or by using
another individual's account, essentially making their activities untraceable.
New virtual currencies, such as Bitcoin, add yet another layer of anonymity by
allowing users to transfer value without the collection of any personally identifiable
information. Regulations often fail to affect such virtual currencies due to lack of
foresight by the regulation writers, creating a legal gray area. Thus, criminals can
continue to capitalize on technological innovation to bolster their illegal activities.
Money laundering is one particular criminal craft that stands to benefit from
technological advancement.
This Note analyzes the effects of Bitcoin and analogous virtual currencies on
anti-money laundering (AML) enforcement. Part I gives a brief primer on money
laundering and virtual currencies. Part II offers a Bitcoin primer, which
differentiates Bitcoin technology from traditional currencies and competing virtual
currencies. Part III analyzes whether Bitcoin is legal to use or trade in the United
States, using domestic and international adoption of Bitcoin for guidance. Part IV
discusses whether current U.S. AML regulatory schemes encompass the entirety of
Bitcoin use, finding that it does not. Finally, Part V offers suggestions for a
regulatory scheme encompassing Bitcoin and analogous virtual currency
technologies. Ultimately, this Note recommends regulating Bitcoin currency
exchanges under existing AML regulation schemes instead of broadening statutory
definitions to control all aspects of Bitcoin or analogous virtual currencies.
t Copyright 0 2014 Danton Bryans.
* J.D. candidate 2014, Indiana University Maurer School of Law; B.S. 2011,
Michigan State University. I began studying, mining, and trading on the Bitcoin network in
early 2011. 1 am grateful to Professors Fred H. Cate, Sarah Jane Hughes, and Anthony J.
Rose for their guidance; to my fellow Indiana Law Journal members for their help preparing
for publication; and to my family for their support.
1. See Cyrus Farivar, Man Accused of Placing GPS Device on Victim's Car Before
Burglarizing Her Home, ARs TECHNICA (Apr. 28, 2013, 11:22 AM), http://arstechnica.com

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