Liberty Deserved? A number of the comments on AmericanBanker.com and BankThink this week were strikingly sympathetic to digital currency issuer Liberty Reserve, which was indicted for alleged money laundering, and its customers. These readers were outraged that the authorities came down so hard on the Costa Rican outfit after serving megabank HSBC with a mere fine for similar money laundering charges. They were also skeptical of the government's explanations of its stance on virtual currencies and fearful for Bitcoin entrepreneurs and users who feel increasingly threatened by government encroachment. Commenting on American Banker Washington Bureau Chief Rob Blackwell's Q&A with Financial Crimes Enforcement Network Director Jennifer Shasky Calvery, one reader questioned her description of Liberty Reserve as the biggest money laundering operation ever. "Did you ask about her selective memory? HSBC's 'pervasively polluted' culture involved more money than Liberty Reserve, for instance." Another commenter saw ulterior motives in the prosecution: "The action against LR [had] nothing to do with money laundering. It was to undermine the growth of Bitcoin which [the government] considers more of a threat than the much greater money laundering by the likes of HSBC (which has more blood on its hands than a 1,000 LRs)." Our own "Monetary Future" columnist, digital currency expert Jon Matonis, noted that Liberty Reserve has been around since 2001, and wondered why the U.S. waited so long to prosecute the company. "Why are their 'crimes' of providing a neutral value transfer service more egregious than they were before?" But at least one reader found the government's position eminently reasonable, writing, "money transmitters need to identify people they transfer money for, and to report suspicious activity...we will either remain serious about money laundering/terrorist financing issues, or we can revert back to our pre-Sept 11 head-in-the-sand mentality." In his own column, Matonis talked to a venture capital fund dedicated to Bitcoin startups that's hired former Treasury officials as advisors, underscoring the increasing importance of compliance smarts to such businesses.

Stay the Course, or Just Stay Put: Two BankThink pieces this week argued against further legislation of financial system reforms, such as the Brown-Vitter bill, though from different perspectives. Mayra Rodriguez Valladares wrote that Dodd-Frank gives regulators sufficient tools to end "too big to fail," but expressed concern that lawmakers and bank lobbyists are preventing them from using those tools properly. Greg Wilson called for a "time-out" not only on legislation but also on finalizing pending Dodd-Frank rules. "We need a far better informed public discussion of the role we want and need banks and other financial institutions to play to ensure a vibrant and robust economy that can sustain noninflationary growth, produce good jobs, and create wealth opportunities for all in our society," he wrote. Also in the regulatory realm: Christopher Cole from the Independent Community Bankers of America poked holes in a recent Goldman Sachs study that claimed large banks enjoy no funding cost subsidy; "Risk Doctor" columnist Clifford Rossi sees a model for U.S. housing finance reform in a U.K. risk-sharing program.

Payments Portents: Lanny Byers worried that adoption of chip-and-PIN technology could make prepaid cards too expensive to issue – unless providers move their products to mobile platforms or shift their emphasis from serving the underbanked to providing valuable services for which people will gladly pay up. Simon Zhen warned that Google's new person-to-person payments feature in Gmail could create stiff competition for banks – unless they answer the challenge with superior services only they can provide.

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