As the bitcoin boom accelerates, so does scrutiny from regulators

Another lively voice in this space is Kathryn Huan, the former Cryptocurrency Director for the Division of Justice and current board person in exchange Coinbase, who just lately testified in front of the Senate judiciary committee.

“But We think the real action in the ICO space with the SEC is however to come: We predict we’ll see most large enforcement actions in the coming year. That said, because the SEC cannot bring activities against each and every ICO that does not adhere to the securities laws and regulations, they’ll want to choose those that will pack the most deterrent punch, so circumstances where massive amounts of money grew up but also where shareholders may have lost money will provide the easiest targets,” stated Huan to CNBC.

Beyond the SEC, other government agencies are monitoring bitcoin activity.

The US Treasury Division has been reviewing how the Financing Crimes Enforcement Network – FinCEN – is addressing money laundering and terrorist activity that involves virtual currencies.

Another agency bitcoin shareholders could hear from is the the inner Revenue Service. The other day, the IRS demanded account information for over 14,000 users.

One bitcoin investor thought to CNBC: “The IRS is wanting to send a strong warning to bitcoin holders that any profits on bitcoin are considered taxable income.”

Even so Huan says the IRS did not even recognize bitcoin and cryptocurrencies until three years ago.

“Interestingly, the IRS subpoena seeks details dating back again to 2013, even though it wasn’t until 2014 that the IRS put out any guidance on how cryptocurrency should be treated for federal government tax purposes. That total question is still a lttle bit unclear in the minds of many, but the IRS has stated that it opinions cryptocurrency as home for tax reasons,” said Huan.

Growing number of past regulators who spoke to CNBC stated more action is coming from one or each of the agencies. However the goal is not to shutdown bitcoin, at this time, professionals say its to get the bad characters that are using cryptocurrencies to fund illegal activities and/or will be committing fraud with preliminary coin offerings.

So while bit coins rise continues, regulatory hurdles could make buying this space more challenging.

“Investors need to be wary and try to do their homework putting their profit,” said Atkins.

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