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AUSTIN, Texas Michael Cargill teaches a concealed handguns safety class at his Austin firearms store while the online version of the business initiates FBI background checks on out-of-state buyers paying in bitcoin.

He says accepting the virtual currency has boosted sales by 50 percent.

There are two things we like in Texas: We like our financial freedom and we love our firearms, Cargill said. Then, gesturing toward a wall of guns inside Central Texas Gun Works, he continued, This is about people taking protection into their own hands. The same is true of bitcoin.

The gun store is among a growing number of businesses that have embraced bitcoin in Texas, which boasts one of the worlds largest bitcoin economies and where the nations first ATMs catering to the currency were installed this year. The growth has been facilitated by a state government that has largely shielded bitcoin from heavy regulation, establishing Texas as a vital testing ground for the burgeoning movement.

Its popularity has spawned a philosophical battle between supporters and other state and federal agencies seeking to regulate a system they say can too easily facilitate money laundering and illegal trafficking. The results could ultimately determine whether bitcoin changes the financial norms across the country.

In order to prevent money laundering, we need to have some points within the ecosystem where the financial intermediaries have some sense of who theyre dealing with, said Benjamin Lawsky, New Yorks financial services superintendent.

Created in 2009, bitcoin has gained traction as a way to buy and sell goods and services without using government-issued money. Businesses and individuals can also trade bitcoin for dollars and other currencies on an online exchange or by using certain bitcoin ATMs, avoiding third parties including banks.

In stark contrast to states such as Texas, New York is considering a licensing system that would require bitcoin operators to verify customers identities, maintain payment records and actively protect against cyber threats. Lawsky says it is naive to think that bitcoin will go mainstream while operating in its current ad-hoc fashion.

The warnings have done little to discourage the increasing use in Texas and other states that have not pushed for heavy regulations. Texas now boasts nine bitcoin ATMs the second most after California and has the worlds fourth largest bitcoin economy, according to the open-source website CoinMap, which bases its assessment on the number of businesses that accept bitcoin.

Continued here:

States differ on need for bitcoin oversight