( 28th - November - 2019 )
Virtual currencies lack many of the regulations and consumer protections that legal tender currencies have. Under U.S. law, a cardholder of a credit card is protected from liability in excess of $50 if the card was used for an unauthorized transaction.
The Electronic Fund Transfer Act (EFTA) was written to protect consumers in transfers through ATMs, point-of-sale terminals, ACH systems, remote transfers, and remittance transfers. However, the EFTA does not apply to VCs, and due to the nature of many VCs, it may not be possible for VCs to be in complete compliance with the Act. For example, the regulations require for a consumer to be allowed 30 minutes to cancel an electronic transfer. Many VCs, such as Bitcoin, do not allow chargebacks, so cancelling the Bitcoin transfer is not possible. Additionally, a credit card that transacts in VC is not protected by the fifty-dollar maximum liability for the holder of the credit card.
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) does not insure VCs.
Federal Election Commission
In a May 2014 Advisory Opinion, the Federal Election Commission (FEC) decided that Bitcoin donations are permitted under FEC laws. This decision will permit microdonations, and it may encourage more people to donate to campaigns. The decision may also encourage more people to attempt to hide their political donations behind the pseudonymity of Bitcoin.
The power to prohibit virtual currencies
The U.S. Congress has the power to regulate or outright prohibit VCs, whether as currency or securities, pursuant to its power to "regulate Commerce with foreign Nations, and among the several States" and under its exclusive constitutional power "to coin Money" and "regulate the Value thereof". In a November 2014 decision, the Court upheld the power of regulators to prosecute a defendant who "designed, created and minted coins called 'Liberty Dollars,' coins 'in resemblance or in similitude' [or made to look like] of U.S. coins." Although the defendant did not pass the Liberty Dollars currency as a counterfeit, the currency was in close enough "resemblance of coins of the United States or of foreign countries" and consequently fell under the authority of 18 U.S.C.A. § 486.123 The Court has not decided if § 486 includes the power to prohibit VCs, but if a Court decides that the purpose and intent of VC resembles United States or foreign currency it may fall under § 486.
The Stamp Payment Act of 1862 prohibits anyone from "mak[ing], issu[ing], circulat[ing], or pay[ing] out any note, check, memorandum, token, or other obligation for a less sum than $1, intended to circulate as money or to be received or used in lieu of lawful money of the United States". The Court has not decided if Congress has the power to prohibit VCs under this Act or any other existing regulation or statute.
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