U.S. Senator Joe Manchin, a democrat from West Virginia, has formally sent a letter to federal regulators calling for an outright ban on bitcoin and suggesting that the failure of immediate action could negatively impact US consumers.
Manchin most recently made headlines for allegedly saying that he would vote to repeal the US Patient Protection and Affordable Care Act (ACA), a hallmark law of the Obama administration aimed at expanding public and private insurance coverage, though he later backtracked on the statements.
The letter, which was sent to Federal Reserve Chairwoman Janet Yellen, among other top regulators, called the digital currency “unregulated and unstable”, and cited increasing warnings from central banks around the globe.
Said Manchin:
“I am most concerned that as bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency.”Notably, this is not the first time the senator has spoken out about bitcoin, having written a lengthy letter on the now-defunct online black marketplace Silk Road last June.
Black market connections
Manchin began the letter by providing a background on bitcoin, before addressing his laundry list of concerns about its use.The senator suggested that bitcoin’s features make it inherently attractive to criminals, who have used the currency to “steal millions from bitcoins users”, and to buy drugs and weapons illegally. Further, he critiqued the irreversible nature of bitcoin transactions as the primary contributor to such issues.
“Bitcoin’s ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions,” the Senator said.
Consumer protection issues
The senator also suggested that bitcoin’s price volatility adds to its dangers, and he cited recent developments at troubled Japan-based exchange Mt. Gox as an example. Manchin painted a picture of bitcoin as an elaborate scheme in which only early buyers, investors and miners benefit. Said Manchin:“There is no doubt average American consumers stand to lose by transacting in bitcoin.”In summation, Manchin again returned to the issue of bitcoin’s deflationary nature, comparing its 98% deflation to the 1.3% inflation shown in the Consumer Pricing Index. Manchin used this data to suggest spending bitcoin now would cost users wealth in the future.
“This flaw makes Bitcoin’s value to the U.S. economy suspect, if not outright detrimental,” said Manchin.
Regulatory impact
Manchin is not the only lawmaker weighing in on bitcoin in the wake of issues at Mt. Gox. The Texas State Securities Board and the Alabama Securities Commission have each published consumer warnings in the recent days.However, this letter, addressed directly to new Federal Reserve Chairwoman Yellen, is unique as it will likely add fuel to speculation that the US central bank head will issue a comment or statement on digital currencies soon.
For detailed records of Manchin’s voting history, click here.
