Are online payments platforms coming under closer scrutiny from the U.S. government?
It’s a question that’s been top of mind for many in the payments space of late, thanks to several high profile cases involving U.S. regulatory bodies and online payments services. At the International Monetary Conference in Shanghai yesterday, Fed Vice Chairman Janet Yellen addressed the increase in attention, and admitted that the Fed is looking into such mechanisms.
"We have been talking at the Fed and with banking organizations, trying to understand what the concerns are with these new payment mechanisms," Yellen said according to The Wall Street Journal.
"This is very much on our radar screen and we are carefully trying to identify where the risks are.”
According to the Journal, Yellen’s remarks came after she was asked about PayPal and a supposed lack of regulation surrounding eBay’s payments arm, as well as other online payments platforms.
In March, the U.S. Treasury Department ruled that money-laundering rules still applied to those who issued or exchanged cash or other currencies online. In mid-May, the Department of Homeland Security seized funds associated with a Dwolla account linked to Mt. Gox, the world’s largest Bitcoin exchange.
Just last week, U.S. authorities charged the operators of online payments exchange Liberty Reserve, which one senior law enforcement official went so far as to dub “PayPal for criminals.”
Those events prompted Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network (FinCEN), to specifically state that the government isn’t targeting digital or virtual currencies.
Yesterday, Yellen used PayPal as an example of an online payments platform that is indeed already subject to regulations.
“In point of fact, at least in the United States, there are regulations that apply to PayPal and other payment providers,” Yellen said, according to a The Raw Story report.
To read more on Yellen’s comments, view the full Wall Street Journal report here.