FORT LAUDERDALE, Fla. (11/19/15)--As a method of payment, Bitcoin ($289 million) has already surpassed daily usage of Western Union ($216 million) and is fast approaching Discover ($299 million), but there are many unknowns for financial institutions.

Todd Erickson, senior vice president and chief operating officer of First Flight FCU, Cary, N.C., helped clear up some of those misconceptions at the CUNA/National Association of State Credit Union Supervisors Bank Secrecy Act Conference Wednesday. Erickson also served on the regulatory affairs committee for the Bitcoin Foundation.

Capitalized Bitcoin is a decentralized distributed global payment network that allows online payments to be sent directly from one party to another without going through a financial institution. Lowercase bitcoin is a digital currency unit, and as of Nov. 18 one bitcoin equals $335.29.

Bitcoin is also a “push” system, unlike bank accounts and credit cards, which are “pull” systems that can be debited without the owner’s knowledge or permission;

According to Erickson, Bitcoin is not:

• A stored value device; it is not a card or other tangible object, and no party besides the holder of bitcoin themselves store any value;
   
• Recognized by the U.S. or any foreign government as legal tender;
   
• An instrument or device for the payment or transmission of monetary value; like a dollar or a peso, it is itself the monetary value;

In addition, bitcoin transactions do not require providing any personal information that hackers can steal or marketers can appropriate; nor does bitcoin obligate any third party to pay its value to its holder. Bitcoin itself is the payment and value.

During his presentation, in the space of less than five minutes, Erickson showed attendees how to make a purchase at an online retailer than accepts bitcoin payments, and transferred 0.1968 bitcoins (which equals $2) to one attendee.

Guidance on Bitcoin has been released by the U.S. Treasury’s Financial Crimes Enforcement Network and the Internal Revenue Service. In addition, the Government Accountability Office has released a report on virtual currencies. 

(Editor’s note: For more coverage of CUNA’s BSA Compliance Conference, see the following stories in today’s issue: BSA Conference: 4th Corner CU talks challenges of serving legal pot biz; BSA Conference: CUs must manage risks associated w/ serving MSBs; BSA Conference: Attendees hear the latest from NCUA, FinCEN, OFAC; and BSA Conference: Expert gives a glimpse into cyber black market)