The value of bitcoins shot up like a rocket earlier this year before dropping almost as quickly due to panic sales, but now one of the biggest reasons some are using the virtual currency may be disappearing. Mt. Gox, the world’s largest bitcoin exchange, announced today on its website that all of its user accounts will have to be verified before any currency transactions will be allowed through them.
In other words, the previous promise of anonymity is essentially gone for bitcoin users.
The Bitcoin Exchange’s Verification Process
Mt. Gox said verification is not currently required to deposit bitcoins—only to either deposit or withdraw using currency like dollars or euros. However, this doesn’t mean that verification won’t be required for bitcoin transactions in the future. Some may very well see this as the beginning of the end for anonymity in the bitcoin world.
Account verification involves providing photo identification and also a document which proves the account owner’s legal residence. At this point it still isn’t clear exactly why Mt. Gox decided to require verification of its users, but a look at some of the clashes between authorities and online payment systems like Mt. Gox may provide a clue.
The announcement about user verification comes the same week as U.S. officials accused Liberty Reserve, another online payment system, of money laundering and referred to it as “PayPal for criminals.”
“It is our responsibility to provide a trusted and legal exchange, and that includes making sure that we are operating within strict anti-money laundering rules and preventing other malicious activity,” Mt. Gox said on its website.
Less than a month ago, U.S. officials also seized assets from Mt. Gox itself after the Department of Homeland Security said claimed the exchange was guilty of transmitting money without a license.
It would certainly seem that Mt. Gox is moving to protect itself in light of regulations that may be forthcoming on the currency. With all the attention bitcoins have gotten recently, regulators are increasingly interested in the virtual currency.
