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OECD: Cash Transactions More Anonymous Than Virtual Currencies
While the debate on the legal status of bitcoin and other virtual currencies lingers on, a new report from the Organisation for Economic Co-operation and Development (OECD) discusses “Refining Regulation To Enable Major Innovations In Financial Markets”.
CoinTelegraph obtained the unclassified document published as an “Issues Paper”, prepared by Dr. Sean Ennis, a Senior Economist in the OECD's Competition Division on behalf of the Secretariat.
The report examines developments in four primary areas: peer-to-peer lending; crowdfunding of equity; virtual currencies and innovative payment/currency exchange solutions.
Virtual currencies are still very controversial, thanks to all the negative publicity and scams. Yet, it is growing at an enormous rate and as the report points out that according to ECB, the combined value of virtual currencies globally is about EUR 3.3 b, as of February 2015.
The principle argument against virtual currencies is the anonymous transaction feature that makes it suitable for illegal activities, including money laundering, terrorism financing and transfer of value for illegal goods.
The report, however, makes an important observation in this context. It draws attention to blockchain, the distributed public ledger that records bitcoin transactions. It argues that in fact cash is much more anonymous means of transferring value than virtual currencies and adds:
“The ownership string for virtual currency is public, though not the actual owner name and address. If that name and address are at one point identified by law enforcers, law enforcers have a powerful mechanism to track entire chains of transfer of value”.
A clear identification of virtual currencies would be required if they are to be encouraged.
“Even if a virtual currency is not declared illegal, discussing the possibility that a currency could be made illegal damages the mutual confidence in the future value of the virtual currency that is necessary for both parties to a transaction to regard it as serving as a store of value”, the report noted.